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VOLUME
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1972
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THE ECONOMICS OF CLEAN WATER
VOLUME I
ENVIRONMENTAL PROTECTION AGENCY
1972
For sale by the Superintendent of Documents, U.S. Government Printing Office
Washington, D.C. 20402 - Price $1.75
Stock Number 5501-0377
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ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
APR 2 7 1972 OFF.CEOFTHE
ADMINISTRATOR
Honorable Spiro T. Agnew
President of the Senate
United States Senate
Washington, D. C. 20510
Dear Mr. President:
I am transmitting to the Congress the fifth annual report
on the national requirements and costs of water pollution con-
trol as required under Section 26(a) of the Federal Water
Pollution Control Act, as amended.
The enclosed report entitled The Economics of Clean Water
represents our current estimates of the investment levels neces-
sary to meet applicable water quality objectives 1n both the
municipal and industrial sectors.
Volume I, The Report, describes the analyses and surveys
which were undertaken to arrive at our current investment esti-
mates. This analysis included an industrial cost model which
was used to estimate required industrial investment and a
detailed study of available data on industrial water use trends.
The amount of planned construction for municipal waste water
facilities obtained by a survey and a statistical model using
municipal data is presented. The volume also contains the water
pollution index for estimating the condition of the nation's
waters and an evaluation of benefits and costs of various waste
treatment levels from a national point of view.
Volume II, Data and Technical Appendices, provides the
basic input and output data for the Industrial facilities eval-
uation model as well as a description of the model itself. It
includes the method and data used for the pollution index and
the procedure used for the survey of planned construction of
municipal waste treatment facilities.
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- 2 -
Volume III, Industry Expenditures for Water Pollution
Abatement, is the report by the Conference Board of a survey
undertaken to provide detailed information on the industrial
view of water pollution control costs.
A fourth part is a summary of major findings and conclu-
sions of the analysis contained in this report.
Sincerely yours,
William D. Ruckelshaus
Administrator
Enclosure
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ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON. D.C. 20460
APR 9 7 1Q7? OFFICE OF THE
«TK ft ( 13/4 ADMINISTRATOR
Honorable Carl B. Albert
Speaker of the House
of Representatives
Washington, D. C. 20515
Dear Mr. Speaker:
I am transmitting to the Congress the fifth annual report
on the national requirements and costs of water pollution con-
trol as required under Section 26(a) of the Federal Water
Pollution Control Act, as amended.
The enclosed report entitled The Economics of Clean Water
represents our current estimates of the investment levels neces-
sary to meet applicable water quality objectives in both the
municipal and industrial sectors.
Volume I, The Report, describes the analyses and surveys
which were undertaken to arrive at our current investment esti-
mates. This analysis included an industrial cost model which
was used to estimate required industrial investment and a
detailed study of available data on industrial water use trends.
The amount of planned construction for municipal waste water
facilities obtained by a survey and a statistical model using
municipal data is presented. The volume also contains the water
pollution index for estimating the condition of the nation's
waters and an evaluation of benefits and costs of various waste
treatment levels from a national point of view.
Volume II, Data and Technical Appendices, provides the
basic input and output data for the industrial facilities eval-
uation model as well as a description of the model itself. It
includes the method and data used for the pollution index and
the procedure used for the survey of planned construction of
municipal waste treatment facilities.
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- 2 -
Volume III, Industry Expenditures for Water Pollution
Abatement, is the report by the Conference Board of" a survey
undertaken to provide detailed information on the industrial
view of water pollution control costs.
A fourth part is a summary of major findings and conclu
sions of the analysis contained in this report.
Sincerely yours,
William D. Ruckelshaus
Administrator
Enclosure
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TABLE OF CONTENTS
Page
LETTERS OF TRANSMITTAL iii-vi
INTRODUCTION 1
PART I
WATER POLLUTION IN 1971 3-15
PART II
TRENDS IN INDUSTRIAL WATER USE—DISCHARGE AND TREATMENT 17-34
PROCESS AND THE USE OF WATER IN INDUSTRY 35-47
INDUSTRIAL COST MODEL 49-59
COST OF INDUSTRIAL WASTE TREATMENT 61-73
CURRENT LEVEL OF INDUSTRIAL WATER TREATMENT COSTS 75-84
WASTE TREATMENT COSTS THROUGH 1976 85-101
APPENDIX: THE INDUSTRIAL WASTE TREATMENT MODEL 103-111
PART III
PLANNED CONSTRUCTION OF MUNICIPAL WASTE TREATMENT FACILITIES 113-148
PART IV
ENVIRONMENTAL AND ECONOMIC BENEFITS AND COSTS RELATED TO VARIOUS
WATER POLLUTION ABATEMENT STRATEGIES 149-157
LIST OF FIGURES
PART I
1. RELATIVE WATER POLLUTION 10
vii
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PART IV
1. TOTAL CONTROL COSTS AS A FUNCTION OF EFFLUENT CONTROL
LEVELS 151
LIST OF TABLES
PART I
1. PREVALENCE OF STREAM QUALITY CRITERIA VIOLATIONS—1971 6
2. RELATIVE INCIDENCE OF WATER POLLUTION 8
3. DISTRIBUTION OF POLLUTION BY MAJOR DRAINAGE AREAS 12
4. WATER POLLUTION INDEX SUMMARIZED FOR MAJOR DRAINAGE AREAS,
1970 AND 1971 13
5. SHIFTS IN PREVALENCE OF POLLUTION SUMMARIZED FOR MAJOR
DRAINAGE AREAS, 1970 AND 1971 15
PART II
1. INDUSTRIAL WASTEWATER DISCHARGE AND VALUE ADDED BY INDUSTRIAL
WATER USE REGIONS, 1959-1968 21
2. INDUSTRIAL WASTEWATER DISCHARGE AND VALUE ADDED BY INDUSTRY
GROUPS, 1959-1968 22
3. REGIONAL INCIDENCE OF INDUSTRIAL WASTE DISCHARGE, BY MAJOR
INDUSTRIAL SECTORS, 1968 23
4. SOURCES OF INDUSTRIAL WASTE DISCHARGE, BY MAJOR INDUSTRIAL
SECTORS, 1968 24
5. PERCENTAGE OF INDUSTRIAL WASTEWATER RECEIVING TREATMENT AND
GROWTH IN TREATMENT BY INDUSTRIAL WATER USE REGIONS,
1959-1968 26
6. PERCENTAGE OF INDUSTRIAL WASTEWATER RECEIVING TREATMENT AND
GROWTH IN TREATMENT BY INDUSTRY GROUPS, 1959-1968 27
7. PERCENTAGE "OF INDUSTRIAL WASTEWATER'DISCHARGED TO SEWERS AND '
GROWTH OF SEWERED DISCHARGE BY INDUSTRIAL WATER USE REGION,
1959-1968 31
viii
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8. PERCENTAGE OF INDUSTRIAL WASTEWATER DISCHARGED TO SEWERS
AND GROWTH OF SEWERED DISCHARGE BY INDUSTRY GROUPS,
1959-1968 32
9. PERCENTAGE OF INDUSTRIAL WASTEWATER DISCHARGED TO THE GROUND
AND GROWTH OF GROUND DISCHARGE BY INDUSTRIAL WATER USE
REGIONS, 1959-1968 33
10. PERCENTAGE OF INDUSTRIAL WASTEWATER DISCHARGED TO THE GROUND
AND GROWTH OF GROUND DISCHARGE BY INDUSTRY GROUPS,
1959-1968 ' 34
11. VOLUME OF INTAKE AND PERCENT CONSUMED BY INDUSTRY GROUPS,
1968 37
12. COMPOSITION OF INDUSTRIAL WATER INTAKE AND WASTE CONCENTRA-
TION BY INDUSTRY GROUPS, 1968 38
13. TRENDS IN INDUSTRIAL WATER INTAKE AND IN MEASURES OF PROCESS
CHANGE BY INDUSTRIAL WATER USE REGIONS, 1959-1968 41
14. TRENDS IN INDUSTRIAL WATER INTAKE AND IN MEASURES OF PROCESS
CHANGE BY INDUSTRY GROUPS, 1959-1968 42
15. AVERAGE OF 1968 INTAKE AS A PERCENTAGE OF 1959 INTAKE FOR
INDUSTRIAL WATER USE REGIONS CLASSIFIED BY RATIO OF WITH-
DRAWALS TO MEDIAN WATER SUPPLY AND GROWTH IN VALUE ADDED 45
16. AVERAGE OF 1968 VALUE ADDED/INTAKE AS A PERCENTAGE OF 1959
VALUE ADDED/INTAKE FOR INDUSTRIAL WATER USE REGIONS CLASSI-
FIED BY RATIO OF WITHDRAWALS TO MEDIAN WATER SUPPLY AND
GROWTH IN VALUE ADDED 45
17. AVERAGE OF 1968 RECYCLE RATIO FOR INDUSTRIAL WATER USE
REGIONS CLASSIFIED BY RATIO OF WITHDRAWALS TO MEDIAN WATER
SUPPLY AND GROWTH IN VALUE ADDED 45
18. AVERAGE OF PERCENTAGE OF DISCHARGE TREATED, 1968, FOR
INDUSTRIAL WATER USE REGIONS CLASSIFIED BY RATIO OF WITH-
DRAWALS TO MEDIAN WATER SUPPLY AND GROWTH IN VALUE ADDED 46
19. AVERAGE OF 1968 TREATED DISCHARGE AS A PERCENTAGE OF 1959 FOR
INDUSTRIAL WATER USE REGIONS CLASSIFIED BY RATIO OF WITH-
DRAWALS TO MEDIAN WATER SUPPLY AND GROWTH IN VALUE ADDED 46
20. AVERAGE OF 1968 RATIO OF TREATED TO TOTAL DISCHARGE AS A
PERCENTAGE OF 1959 FOR INDUSTRIAL WATER USE REGIONS CLASSI-
FIED BY RATIO OF WITHDRAWALS TO MEDIAN WATER SUPPLY AND
GROWTH IN VALUE ADDED 46
ix
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21. COMPARISON OF CENSUS REPORTED ESTABLISHMENT AND WATER DATA
FOR FACTORIES WITH INTAKE 20,000,000 G/YR. WITH MODELLED
FACTORIES 51
22. FLOW & EMPLOYMENT COMPARISON BY U.S. BUREAU OF CENSUS WATER
USE REGIONS 53
23. FLOW & EMPLOYMENT COMPARISONS BY INDUSTRY 54
24. BASIC ELEMENTS OF THE INDUSTRIAL WASTE TREATMENT MODEL 58-59
RELATIVE INFLATION, MEASURED BY SELECTED PRICE INDICES 62
25. MAXIMUM INDUSTRIAL WASTE TREATMENT REQUIREMENTS 1968
CONDITIONS 63
26. VARIATION IN CAPITAL REQUIREMENTS UNDER ALTERNATIVE WATER
UTILIZATION REGIMENS, 1968 CONDITIONS 65
27. ANNUAL OPERATING AND MAINTENANCE COSTS AS A FUNCTION OF
CAPITALIZATION 70
28. ANNUAL COSTS OF WASTE TREATMENT UNDER 1968 PRODUCTION
CONDITIONS 73
29. CURRENT REPLACEMENT VALUE AND ANNUAL COSTS ASSOCIATED WITH
REPORTED INDUSTRIAL WASTE TREATMENT, 1968 77
30. PERCENTAGE OF REQUIRED WASTE TREATMENT SUPPLIED BY
INDUSTRY, 1968 79
31. VOLUME OF MANUFACTURERS WASTES, SEWERED AND TREATED PRIOR
TO DISCHARGE BREAK, 1968 80
32. VALUE AND PERCENTAGE OF INDUSTRIAL WASTE TREATMENT REQUIRE-
MENTS SUPPLIED PUBLICLY IN 1968 81
33. INDUSTRIAL WASTE TREATMENT SITUATION SUMMARY, 1968 84
34. INVESTMENT, 1969-1971 (AS REPORTED BY McGRAW HILL & CO.) 87
35. ANNUAL EXPENDITURES CONSISTENT WITH STANDARDS COMPLIANCE BY
1976 89
36. MANUFACTURERS' ASSESSMENT OF INVESTMENTS REQUIRED TO COMPLY
WITH POLLUTION CONTROL REQUIREMENTS, JANUARY 1971 92
«
37. PROJECTED CASH OUTLAYS ASSOCIATED WITH ATTAINMENT OF
DISCHARGE STANDARDS BY 1976 96
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38. INCREMENTAL WASTE TREATMENT COSTS RELATED TO VALUES ADDED
BY MANUFACTURERS, 1968 98
39. INCREASES IN THE PRICES OF MANUFACTURED GOODS TO BE
ATTRIBUTED TO WASTE TREATMENT COMPLIANCE, 1968 CONDITIONS.... 101
A. COST TO FLOW RELATIONSHIPS, BASIC WASTE TREATMENT PROCESSES.. 108
B. EVALUATION OF INDUSTRIAL WASTE DISPOSAL PRACTICES, 1968 Ill
PART III
1. SUMMARY OF SURVEY RESPONSES 115
2. ESTIMATED COST OF CONSTRUCTION OF PLANNED MUNICIPAL WASTE
TREATMENT FACILITIES FOR MUNICIPALITIES WITH OR SERVING
POPULATIONS OF 10,000 OR MORE, FOR PERIOD FY 1972-1976,
BASED ON SURVEY COMPLETED IN DECEMBER 1971 116
3. SURVEY RESULTS OF ESTIMATED CONSTRUCTION COST OF SEWAGE
TREATMENT FACILITIES PLANNED FOR THE PERIOD FY 1972-1976 117
4. EVALUATION OF CAPITAL IN PLACE AND OF DEFINED NEEDS 120
5. PATTERN OF EXISTING FACILITIES 121
6. COMPUTED VALUES FOR VARIOUS CATEGORIES OF NEEDS OVER TIME.... 'l23
7. INCREASE IN DEFINED WASTE TREATMENT NEEDS OVER TIME 124
FIVE-YEAR BACKLOG ELIMINATION SCHEDULE AT 7.5 PERCENT
INFLATION 125
8. MODEL INVESTMENT SCHEDULE, INVESTMENT NEEDED TO REDUCE
BACKLOG BY 1976 '. 127
9. ESTIMATED COST OF CONSTRUCTION OF MUNICIPAL SEWAGE TREATMENT
WORKS FOR THE PERIOD DECEMBER 1970 THROUGH JUNE 1974 129
10. CHANGES IN STATE SEWAGE TREATMENT INVESTMENT NEEDS EXPRESSED,
1969-1971 131
11. VALUE OF PROJECTS PENDING CONSTRUCTION AND UNDER CONSTRUCTION
AS OF OCTOBER 31, 1971 134
12. FEDERALLY-ASSISTED STARTS IN CONSTRUCTION OF MUNICIPAL WASTE
TREATMENT FACILITIES 136
13. PROJECTED FEDERALLY-ASSISTED STARTS IN CONSTRUCTION OF
MUNICIPAL WASTE TREATMENT FACILITIES 137
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14. ESTIMATED COST OF CONSTRUCTION IN ACCORDANCE WITH REGULATORY
REQUIREMENTS 140
15. COST SUMMARY OF NEEDED FACILITIES BY DESCRIPTION AND TYPE.... 141
16. ESTIMATED COST OF TERTIARY TREATMENT, NITRATE AND PHOSPHATE
REMOVAL FACILITIES PLANNED FOR CONSTRUCTION DURING FY 1972-
1976, BY MUNICIPALITIES WITH OR SERVING POPULATIONS OF
10,000 OR MORE I43
17. EXPECTED YEAR OF OPERATION OF PROJECTS TO BE INITIATED IN
FISCAL YEARS 1972-1976 IN MUNICIPALITIES WITH OR SERVING
POPULATIONS OF 10,000 OR MORE I44
18. NUMBER OF MUNICIPALITIES, HAVING CONSTRUCTION NEEDS IN THE
FY 1972-1976 PERIOD, WITH USER CHARGES, AND THE METHOD UPON
CHARGE BASED AND YEAR RATE ESTABLISHED 145
19. ESTIMATED NUMBER OF EMPLOYEES NEEDED TO MAN FACILITIES,
PROPOSED FOR CONSTRUCTION DURING FY 1972-1976, AND FISCAL
YEAR FACILITIES EXPECTED TO BE OPERATIONAL 147
20. PROGRAM ACCOMPLISHMENTS 148
PART IV
1. INDEX OF POLLUTION CONTROL INVESTMENT COSTS RELATED TO LEVEL
OF ABATEMENT 152
2. MUNICIPAL COSTS 153
3. INDUSTRIAL COSTS 154
4. TOTAL NATIONAL COSTS 156
xii
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INTRODUCTION
This report represents the fifth in the series of clean water reports to
the Congress prepared in accordance with Section 26(a) of the Federal
Water Pollution Control Act, as amended.
Part I of this volume contains an assessment of the prevalence and degree
of water pollution occurring nationally and compares the 1971 results with
those of 1970. This is a tentative estimate, and EPA plans to considerably
improve the quality of its water pollution trend analysis in 1972.
Because of the increasing importance of capital requirements associated
with industrial waste treatment, this report presents in Part II indus-
trial trends in water use, discharge, and treatment and an estimate of
the capital investment requirements through 1976.
The results of the recent municipal needs survey are reported in Part III
along with an estimate of needs statistically derived from the facilities
evaluation model developed last year (Cost of Clean Water, March 1971,
Volume II). In addition, the ability of the construction industry to
construct the needed treatment works is examined.
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WATER POLLUTION IN 1971
Introduction
This section describes a procedure that is being developed by EPA for
evaluation of water pollution. The indexing procedure allows any water-
body or set of waterbodies to be described with respect to water pollution
characteristics. Data on the prevalence of pollution for this index has
been collected for the years 1970 and 1971.
A further development of this index is to include duration and intensity
of water pollution as factors in describing waterbodies. Such data were
collected for the first time in 1971. These results show that pollution
varies from region to region and is a response to geographical as well
as economic circumstances.
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Methodology Used to Calculate Index
The Environmental Protection Agency is continuing its effort to develop
a comprehensive measure of relative water quality. It has developed
internally a procedure for measuring not water quality in the absolute,
but deviations from established standards of water quality.
Water Quality Standards
Interstate water quality standards are the basis of the definition of
the condition of pollution.
The water quality standards are a three-fold device that established for
discrete stream reaches: (1) a statement of the uses of water that are
physically and chemically possible in nature and which are desired by
the users and potential users of those waters, (2) a definition—gener-
ally in quantitative terms—of the physical, chemical, and biological
conditions that are minimally consistent with those uses (subject to the
general constraint that where one or more of those conditions were superior
to the scientifically-determined minimum at the time the standards were
developed, the existing quality of the waters in question would consti-
tute the acceptable minimum for such'parameters), and (3) a plan for
meeting water quality criteria.
The "water pollution index" addresses only the first two of the three
elements of the standards. It is concerned with observable, verifiable
environmental fact rather than legal, regulatory, administrative, or
technological arrangements of implementation plans.
Comparison to Standards-^-Prevalence of Pollution
The basic element of the index is a simple measurement or judgement.
Once standards have been determined for a set of water quality parameters,
the procedure calls for a comparison of those standards with measured
quality. Where any variable or combination of variables do not meet
or exceed the standard, then a state of pollution exists—by definition.
This rather rudimentary test was first applied in 1970, when a ratio of
polluted waters to total waters was established for the nation, using the
simple formula:
P = prevalence of pollution
IT
Where P = number of stream and shoreline miles in which one or
more of the established chemical and biological criteria
had not been met one or more times.
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M = total stream and shoreline miles, to and including third-
order tributaries
1970 Results
The assessment of the prevalence of pollution made in 1970,indicated that
almost 27 percent of America's stream miles were polluted.
1971 Results
Measuring the prevalence of pollution alone (which excludes duration and
intensity factors; cf. Table 1), it appears that water pollution increased
from 1970 to 1971. While the 1970 assessment indicated that water
quality criteria violations occurred over almost 70,000 stream miles, the
assessment in 1971 suggested that more than 76,000 stream miles did not
conform to water quality criteria. In terms of relative prevalence, pol-
lution extended from 26.8 percent of the nation's waters to 29.3 percent.
In point of fact, the assessed prevalence of water pollution in 1971 may
understate the amount of the increase. Several States of the Upper
Mississippi Basin and the Southwest have included in their water quality
standards exceptions for conditions due to precipitation. The 1970
evaluation of stream conditions took into account only in-stream violations
of water quality criteria, without making the stipulated allowance for
source. On the other hand, the addition of stream miles predominantly
polluted by acid mine drainage in the Ohio Basin would tend to overstate
the increase since they were not assessed in 1970.
Regional Variation in Pollution Prevalence
Every part of the nation has some water pollution, but the shares are
very unevenly distributed. There were in 1971 almost twice as many pol-
luted stream miles east of the Mississippi River as west of it.
When viewed from the standpoint of the ten Federal Administrative Regions,
as presented in Table 1, pollution was more than five times as common in
the Chicago Region as in the Kansas City Region. (It should be noted,
however, that the Kansas City Region is one where assessment is heavily
As originally reported in Cost Effectiveness and Clean Water, the
value was given as 31.2 percent.Continuing analysis of the data indi-
cated that: (!) length of minor tributary streams was under-reported in
the aggregate and (2) overlapping administrative boundaries caused double-
counting of polluted miles in some cases. When adjusted for these factors,
reported prevalence of pollution dropped to 26.8 percent.
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TABLE 1
PREVALENCE OF STREAM QUALITY CRITERIA VIOLATIONS—1971
EPA Region
I Boston
II New York
III Philadelphia
IV Atlanta
V Chicago
VI Dallas
VII Kansas City
VIII Denver
IX San Francisco
X Seattle
Contiguous U. S.
East of Mississippi River
West of Mississippi River
Stream and
Shoreline
Miles
29,701
4,889
24,311
39,125
28,769
46,646
19,189
22,693
16,693
28,166
260,324
126,795
133,529
Miles of
Criteria
Violation
4,869
2,071
8,437
14,840
18,569
10,010
2,396
5,688
3,956
5,477
76,299
48,777
27,522
Percent
of Miles
Polluted
16.4
42.4
34.7
37.9
64.5
21.5
12.5
25.0
23.5
19.4
29.3
38.5
20,6
Percent
of Total
U.S. Miles
11.4
1.9
9.3
15.0
11.1
17.9
7.4
8.7
6.5
10.8
100.0
48.7
51.3
Percent
Polluted
Miles
6.4
2.7
11.1
10.4
24.3
13.1
3.1
7.4
5.2
7.2
100.0
63.9
36.1
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affected by the exclusion of stream quality criteria violations traceable
to precipitation.) While the Chicago Region was the only one in which
polluted natural waters were more common than unpolluted, more than a
third of the waters of the New York, Philadelphia, and Atlanta Regions
were found to be polluted during 1971.
Comparison to Standards
Duration and Intensity of Pollution—Incidence
An assessment of pollution in terms of mere prevalence is essentially
unsatisfactory—rather like equating cancers, chronic appendicitis, and
the common cold in an assessment of health conditions. Degree of pollution
and its persistence are significant dimensions of the phenomenon—perhaps
the more significant, given the range of uncertainties that attach to the
water quality criteria. EPA is developing the pollution i,ndex to include
such factors.
The water pollution index, using 1971 data, takes these factors into
account by establishing separate weighting values to a circumstance of
pollution, according to its seasonal characteristics and its interference
with uses sanctioned by the water quality standards. The simple formula
for determining the prevalence of pollution becomes only slightly more
complex, but the level of effort and judgement required to apply the
formula is increased enormously:
P • D • I = Water Pollution Index
M
Where D = a factor ranging from 0.4 to 1.0 to express the inter-
seasonal duration of pollution.
I = a factor ranging from 0.1 to 1.0 to express the intensity
of water pollution in terms of damage.
(An explanation of these variables is contained in the Technical
Appendix [Volume II of this report].)
When reach-by-reach pollution conditions are weighted to give expression
to duration and intensity an index is formed which provides a consistent
measurement of unequal variables against a common base—in this case, the
water quality standards.
Relationship of the Duration-Intensity Factors
to Prevalence of Pollution—1971
The relative water pollution standing of Federal Administrative Regions
is not significantly changed when the frame of reference shifts from simple
prevalence of pollution to an index of prevalence weighted by relative
duration and severity (cf. Table 2).
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TABLE 2
RELATIVE INCIDENCE OF WATER POLLUTION
00
EPA Region
I Boston
II New York
III Philadelphia
IV Atlanta
V Chicago
VI Dallas
VII Kansas City
VIII Denver
IX San Francisco
X Seattle
Contiguous U. S.
East of Mississippi River
West of Mississippi River
Percent Of Stream
Miles Polluted
16.4
42.4
34.7
37.9
64.5
21.5
12.5
25.0
23.5
19.4
29.3
38.5
20.6
Duration
Intensity
Factor
.62
.45
.58
.45
.43
.37
.33
.23
.20
.11
.41
.48
.28
Duration- Intensity
As a Percent of
U.S. Mean
151
no
141
no
105
90
81
56
49
27
100
117
68
Percent
Polluted
U.S. Miles
6.4
2.7
11.7
19.4
24.3
13.1
3.1
7.4
5.2
7.2
100.0
63.9
36.1
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In general, the greater the prevalence of water pollution, the higher the
aggregated duration-intensity factor. There are, however, exceptions.
The Boston Region—that is, the New England States—is second only to the
Kansas City Region with respect to the portion of its waters that is not
polluted; but it is the worst region in the nation with respect to
persistence and damage. The Denver Region, which stands fifth among the
ten administrative regions in extensiveness of pollution, is a creditable
ninth with respect to duration and intensity. And though the Chicago
Region has the worst pollution index, it is largely because it has the
highest prevalence of pollution, since it is no worse than fifth in terms
of persistence and damage.
These distributional features become more apparent when the categorical
focus is shifted from political to natural boundaries. For comparative
purposes, then, the discussion from this point will be framed in terms
of nine sets of physical drainage areas (cf. Figure 1):
1. "The Northeast Basins" is composed of those watersheds that drain
directly to the Atlantic from the Canadian border on the north
to the drainage area of Chesapeake Bay on the south;
2. "The Middle Atlantic Basins" comprises drainage to the Atlantic
from Chesapeake Bay southward to the drainage of the Santee
River;
3. "The Southeastern Basins" consists of the drainage to the Atlantic
from the Santee River southward, the east bank drainage to the
Mississippi from the Tennessee River southward, and direct drain-
age to the Gulf of Mexico east of the mouth of the Mississippi;
4. "The Great Lakes Basins" consists of the drainage of the Great
Lakes and the St. Lawrence River;
5. "The Ohio Basin" is the area drained by the Ohio River;
6. "The Missouri River Basin" consists of the drainage area of the
Missouri and the Souris-Red-Rainy systems, as well as direct
western discharges to the Mississippi River north of the
confluence with the Missouri River;
7. "The Gulf Basins" consists of the west bank discharges to the
Mississippi River that occur south of the drainage of the
Missouri, together with direct discharges to the Gulf of Mexico
that occur west of the Mississippi River;
8. "The California Basins" includes the area drained by all dis-
charges to the Pacific Ocean south of the Oregon-California
border, together with discharges to the Gulf of California
and the closed watersheds of the Great Basin; and
9. "The Columbia North Pacific Basins" includes the area drained
by the Columbia River and all direct discharges to the Pacific
Ocean between the Canadian and California borders.
When the pollution index data are framed in these hydrologic terms,
the degree to which water pollution is concentrated becomes more
evident. The three broad hydrologic groupings for which both the
prevalence factor and the duration-intensity factor are above the
national mean include 48 of the 61 second-order watersheds in which
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FIGURE I
RELATIVE WATER POLLUTION
POLLUTION INDEX LEGEND
• WHITE Less IhJn .it
' BLUE .05 - .10
• SHEEN .11 - .25
• RED Greater Than .25
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more than half of all stream and shoreline miles are reported to be
polluted. The same three (Ohio, Southeast, Great Lakes) also include
79 of the 113 second-order watersheds in which aggregated duration-
intensity factors exceed the national value. Among them, they include
23.9 percent of the nation's stream miles (third-order streams or
greater), but 48.9 percent of the polluted stream miles.
The smaller the units of the hydro!ogic system that are considered, the
more apparent it becomes that water pollution may be far more concen-
trated than is generally supposed. Table 3 provides a demonstration of
that fact. It arranges the 241 first-order tributaries of the nine
broad, synthetic hydrologic groupings in class intervals according
to prevalence of pollution and duration-intensity. The table makes
it clear that extensive pollution is very nearly limited to the Ohio,
Great Lakes, and Southeastern drainage systems. And though the North-
eastern watersheds are in a class with the other three with respect
to duration and intensity of pollution, they tend to dominate that
measure as we!1.
Thus the median class interval for prevalence of pollution is:
21-30 percent of stream and shoreline miles for the U.S.
81-90 percent for the Ohio River Basin,
21-30 percent for the Southeastern Basins,
41-50 percent for the Great Lakes Basins, and
11-20 percent for the rest of the nation.
Similarly with respect to duration-intensity of pollution, where the
median is:
.410 - .509 for the nation,
.410 - .509 for the Ohio River Basin,
.610 - .709 for the Southeastern Basins,
.410 - .509 for the Great Lakes Basins, and
.310 - .409 for the rest of the nation.
It is not appropriate to compare 1970 and 1971 conditions of water pol-
lution on the basis of the separate national assessments. The quality of
the 1971 survey was far superior to its predecessor, due largely to the
facts that an informational and experiential base was established by the
1970 survey that resulted in an improved second effort, and that a more
rigorous methodology was imposed on the assessors in 1971. Further,
the 1971 assessment included provision for the duration and intensity
factors that go into the water pollution index.
A comparison of the common factor of prevalence, however, can be made.
Such an evaluation is summarized by major drainage area in Table 4. In
general, the major drainage areas with the higher prevalence of pollution
in 1970 became even worse in 1971.
11
-------
TABLE 3
DISTRIBUTION OF POLLUTION BY MAJOR DRAINAGE AREAS
INi
Percent of
Stream Miles
Pol 1 uted
0
1-10
11-20
21-30
31-40
41-50
51-60
61-70
71-80
81-90
91-100
Total
Prevalence
Factor
Duration-
Intensity
Factor
0 -.109
.110-. 209
.210-. 309
.310-. 409
.410-. 509
.510-. 609
.610-. 709
.710-. 809
.810-. 909
.910-1.00
Ohio
2
2
3
3
2
9
21
.84
.42
1
2
7
3
4
3
1
Number of Tributary Basins
South
East
1
10
5
4
5
4
1
4
2
1
2
39
.38
.74
1
1
2
2
5
10
12
4
2
Great
Lakes
1
7
4
9
3
4
3
5
5
2
6
49
.41
.45
3
2
8
3
11
4
3
6
6
3
North
East
1
9
6
6
3
1
4
1
31
.18
.61
1
3
2
4
5
5
8
3
Middle
Atlantic
5
8
1
14
.17
.47
2
2
8
2
California
3
5
6
1
2
1
2
4
1
25
.29
.27
6
8
5
3
1
1
1
Gulf
6
15
6
2
2
31
.17
.35
1
12
4
5
4
3
1
1
Missouri
3
6
3
2
1
1
1
17
.17
.37
6
2
2
5
1
1
Columbia
1
2
5
5
1
14
.19
.12
9
3
2
U.S.
10
50
52
33
20
15
10
17
10
7
17
241
.29
.41
27
28
27
31
34
23
23
28
15
5
Percent of
U.S. Total
4.2
20.8
21.6
13.7
8.3
6.2
4.2
7.1
4.2
2.9
7.1
100.0
11.2
11.6
11.2
12.9
14.1
9.5
9.5
11.6
6.2
2.1
-------
CO
TABLE 4
WATER POLLUTION INDEX SUMMARIZED FOR MAJOR DRAINAGE AREAS, 1970 AND 1971
Major Watershed Stream Miles Polluted Miles 1971 D.I. Factor
Ohio
Southeast
Great Lakes
Northeast
Middle Atlantic
California
Gulf
Missouri
Columbia
U. S.
U. S. Less Ohio
U. S. Less Columbia
28,992
11,726
21 ,374
32,431
31,914
28,277
64,719
10,448
30,443
260,324
231 ,332
229,881
1970
9,869
3,109
6,580
11,895
4,620
5,359
16,605
4,259
7,443
69,739
59,870
62,296
1971
24,031
- 4,490
8,771
5,823
5,627
8,429
11,604
1,839
5,685
76,299
52,268
70,614
Change
+13,746
+ 1 ,381
+ 2,191
- 6,072
+ 869
-«- 2,499
- 5,001
- 2,420
- 1,758
+ 5,435
- 8,311
+ 7,193
.42
.74
.45
.61
.47
.27
.35
.31
.12
.41
.40
.43
-------
Unfortunately, of the four apparently significant shifts in reported
water pollution that took place—in the Ohio, Gulf, Missouri, and North-
eastern Basins—three are so obscured .by variations in procedure that
it is difficult to evaluate the degree of real change. Both the Gulf
and the Missouri Basins reported an enormous improvement in compliance
with water quality standards. But in each case, the 1970 assessment
failed to make allowance for legally sanctioned breaches of water
quality criteria that resulted from precipitation; and in either case,
that exception is a significant matter. Apparent improvement, then,
can only be ascribed with assurance to compliance with a legal standard,
not to better water. And in the case of the Ohio River Basin, the 1970
assessment concentrated on the quality of major waterbodies, overlooking
smaller tributaries. But in the Ohio, a phenomenon that is almost
unknown elsewhere is common, in that many streams are polluted at the
source as a result of the acid drainage of mountain coal mines.
Of twenty-one river systems in the Ohio River Basin, nine—the Little
Miami, the Licking, the Miami, the Kentucky, the Salt, the Green, the
Wabash, and the East and West Forks of the White—are in violation of
water quality criteria over their total span during at least part of
each year. Three others—the Guyandot, the Hocking, and the Cumberland--
have only a few miles free of pollution. Failure to account for this
total prevalence of pollution in 1970 is at least partially responsible
for the increase in reported pollution in 1971.
On the basis of the data available, if data anomalies are overlooked,
we may conclude that substantially the same number of river miles was
polluted in 1971 as in 1970 and that the western States had less water
pollution and less severe water pollution than eastern States. (The
evaluation holds for changes in the water quality of discrete river
systems as well as for gross hydraulic groupings (cf. Table 5).2 In
coming years as comparable data is developed, the water pollution
index will be able to better identify trends in pollution for the nation.
2Appendix—presents instructions for calculating the pollution
indices, and index data summarized for second-order watershed.
14
-------
TABLE 5
SHIFTS IN PREVALENCE OF POLLUTION SUMMARIZED FOR MAJOR DRAINAGE AREAS, 1970 AND 1971
Number of Tributary Basins^
Ohio River Basin
Southeastern Basins
Great Lakes Basins
Northeast Basins
Middle Atlantic Basins
Cal i f orni a-Col orado-Cl osed Bas i ns
Gulf-Southwest Basins
Missouri Basin
Columbia-North Pacific Basins
U. S.
Pollution
Increased
18
13
25
5
5
11
4
3
4
88
Unchanged
(± 10 Percent)
1
24
5
5
2
4
6
1
2
50
Pollution
Decreased
0
1
18
18
5
9
20
12
8
91
970 Data not available in all cases.
-------
I
TRENDS IN INDUSTRIAL WATER USE—DISCHARGE AND TREATMENT
Introduction
The chapter traces quantitatively trends in manufacturing use of water
between 1959 and 1968, concentrating on growth of discharge volume, rates,
and waste treatment, and relating them to changes in the institutional
setting.
Summation
Industrial water intake and discharge is increasing at a less pronounced
rate than industrial output. The proportion of industrial wastewater dis-
charge that is treated continues to grow, and amounted to 37 percent of
discharge in 1968. Waste treatment growth was less between 1964 and 1968
(3.1 percent annual rate of increase), however, than between 1959 and
1964 (10.5 percent annual rate of increase). Most of the increase in
industrial waste treatment occurred at the factory. For, although use of
public sewers and waste treatment plants is the main method of waste dis-
posal for a number of manufacturing sectors, the portion of industrial
effluent discharged to public facilities dropped from almost 9 percent in
1959 to little more than 7 percent in 1968.
17
-------
TRENDS IN INDUSTRIAL WATER USE—DISCHARGE AND TREATMENT
Publication of Water Use in Manufacturing, 1967 permits a survey of
trends over the period 1959 to 1968 and re-examination of findings
reported in Volume II of the Cost of Clean Water for 1967. Also
available for analysis of industrial practices with respect to handling
of liquid-borne wastes is a recent survey conducted by the Conference Board.
Under the sponsorship of the Federal Water Quality Administration, the
Conference Board (formerly the National Industrial Conference Board) con-
ducted a survey of establishments in the seven heaviest water-using manu-
facturing groups.1 From the almost 800 responses, a number of significant
findings emerged.
The Institutional
Important changes in institutions and attitudes with respect to industrial
waste discharges, and discharge of pollutants generally, occurred during
the sixties. 'Amendments to PL 660 (the Federal Water Pollution Control
Act) in 1966 required the States, in consultation with all users of inter-
state waterways and to the satisfaction of the Secretary of the Interior,
to set standards for interstate waterways. The standards were to account
for all uses of the waterwasy except as a medium for-the disposal of
wastes. Negative sanctions for dischargers, including industrial dis-
chargers, who violated the standards were also developed. As a consequence
of State and Federal efforts to attain, or in some cases maintain, water
quality standards, a large number of industrial dischargers have indicated
they will comply with the standards by installing treatment measures,
altering processes, or curtailing pollutant-generating activities. Prior
to the promulgation of water quality standards, a number of States had
some kind of pollution surveillance and enforcement program. These provide
an indication of the differences in intensity of water pollution control
activities between the first and second half of the sixties. Man-years
of such programs in the United States grew at an annual rate of 3.3 per-
cent from 1959 to 1964, but from 1964 to 1968 the annual rate of growth
was 13.4 percent; and since 1968 the annual rate of growth has been almost
21 percent. Assuming that there is a positive correlation between effec-
tiveness of a program and the resources allocated to it, the growth in
State water pollution control activities has provided an additional impetus
to curtailment of waste discharges by industries.
'The industry groups surveyed were Food and Kindred Products
(SIC 20), Textile Mills Products (SIC 22), Paper and Allied Products
(SIC 26), Chemical and Allied Products (SIC 28), Petroleum and Coal
Products (SIC 29), Rubber and Plastics Products (SIC 30), and Primary
Metals (SIC 33).
18
-------
Amendments to the Water Pollution Control Laws during the last decade
have increased both the amount of federal funds devoted to municipal
wastewater treatment works and the federl share of the total funds.
To the extent that local communities are primarily interested in
recovery of local out-of-pocket costs rather than total system costs
from those connected to the system, the increased federal share and
funding levels represent an increase in subsidies to connected indus-
trial establishments. This added incentive to treat wastes should have
resulted in increased industrial connections to municipal treatment
works, and, presumably, more adequate treatment of industrial wastes.
Continued pressures on existing supplies of freshwater, both surface
and ground, have, in a large portion of the continental United States,
increased the cost of obtaining additional units of water suitable for
industrial application. In order to obtain additional units of water,
industry has had to turn to poorer quality water, such as brackish water
or treated sewage effluent, and to sink deeper wells. In effect, the
price to industry of obtaining water has generally increased during the
last decade and has provided an incentive to economize on water intake.
Process change, including recycling, directed towards more efficient
use of water cah have a number of benefits. Process changes may decrease
the amount of water-borne residuals per unit of product produced. Indus-
trial recycling and reuse of water will often result in a highly concen-
trated end-of-stream effluent which generally eases the problems of waste
handling and disposition, and can make by-product recovery a profitable
activity. In addition to the problem of increasing pressures on available
supplies of freshwater, the Northeastern drought of the early 'sixties has
probably brough the necessity for planning for adequate industrial water
supplies into many capital budgeting decisions. In fact, a study of the
response of local government and industry to the Northeastern drought in
the State of Massachusetts indicates that industry primarily adjusted to
the situation by investing in equipment to recirculate water—almost 70
percent of the reported investments to adjust to the drought were for
recirculation facilities.2
One additional change in the climate in which decisions concerning ultimate
dispostion of industrial waste discharges were made is the increased public
relations value to a firm of industrial pollution control measures. In the
late 'sixties environmental and consumer, issues received considerable atten-
tion from citizens and politicians. This concern has increased the value
to a firm of installing and publicizing a pollution control facility.
Clifford S. Russell et al., Drought and Water Supply (Johns Hopkins
Press, 1970), p. 110.
19
-------
Although all of the above developments might be expected to provide an
incentive to industry to curtail and treat liquid-borne wastes, other
trends mitigate against reduction in the discharge of industrial
pollutants. The sheer growth of manufacturing output and the associated
production of residuals continues to create waste handling problems.
Over the period 1959-1968 the Federal Reserve Board Index of Industrial
Production for manufacturing increased 59 percent, and for the five major
water-using industries—food products, paper, chemicals, petroleum, and
primary metals--the index grew by 29, 48, 94, 33 and 52 percent,
respectively. In addition to water demand growing directly out of pro-
duction growth, industry's continued accumulation of capital created
both a direct demand for cooling water and indirect demand by increasing
the consumption of thermally generated power used by industry.
In summary, a number of economic and institutional changes in the last
decade lead to the expectation that incentives have been provided for
industry to curtail and treat liquid-borne wastes. Offsetting these
incentives are growth of production and consequent residuals production.
Industrial Water Use and Discharge 1959-1968
According to the Water Use in Manufacturing, 1967 14,276 billion gallons
of wastewater were discharged in 1968 by manufacturing establishments
using 20 million gallons of water or more. The 1968 figure represents
an 8.5 percent increase over 1964 and 24.7 percent increase over 1959.
However, as Tables 1 and 2 indicate, discharge across the nation and
for most industries over the period 1959 to 1968 grew at a slower rate
than did value added (in constant dollars), as is also the case for
most of the industrial water use regions.
For those industries for which this was not the case the following
observations can be made. Data anomalies result from industry concen-
tration which leads to fewer and larger firms with a higher number of
establishments in the over 20 MGY category. Some industries using lower
grade raw materials have more need for residuals elimination and some
could have operations at a lower percent of capacity on a more heavily
capitalized base.
Estimates of industrial production of BOD5 presented in the 1971 Cost
of Clean Water3 indicated that this component of total waste produced
increased by 97 percent between 1957 and 1968, though, of course, a
significant portion of this load was withheld from surface water bodies
through treatment.
The geographical incidence of industrial waste discharges in 1968
is shown in Table 3. Not surprisingly, the industrial Northeast and
Midwest are the largest repositories of industrial discharges, with
the Western Gulf area also receiving a significant portion. The
industrial sources of discharges within regions are indicated in Table 4.
3
U. S. Environmental Protection Agency, Water Quality Office,
Cost Effectiveness and Clean Water (1971)/p. 29.
20
-------
TABLE 1
INDUSTRIAL WASTEWATER DISCHARGE
AND VALUE ADDED BY INDUSTRIAL
WATER USE REGIONS, 1959-68
ro
Industrial Water Use Region
New England
Delaware and Hudson
Chesapeake Bay
Ohio
Eastern Great Lakes
Tennessee-Cumber!and
Southeast
Western Great Lakes
Upper Mississippi
Lower Mississippi
Missouri
Arkansas-White-Red
Western Gulf
Colorado Basin
Great Basin
California
Pacific Northwest
Total Industrial
Wastewater
Discharges, 1968
(Billions of Gal.)
558.4
1191.9
754.
2295,
1459.
.7
.4
,7
535.9
1099,
1811,
581,
744,
141,
184,
National
1
1899.1
18.3
26.8
314.1
532.5
14150.4
1968 Industrial
Wastewater Discharge
as a Percentage of
1959 Discharge
1968 Value Added
(Deflated) as a
Percentage of
1959 Value Added
113.0
98.1
133.8
111.2
112.0
185.7
140.1
131.4
144.7
175.6
102.1
114.0
135.8
261.4
116.5
110.6
119.4
124.6
131.6
114.6
140.8
133.1
120.3
196.1
162.0
136.9
131.4
179.0
147.5
105.0
185.0
256.6
179.7
154.4
159.4
138.6
Excludes Hawaii and Alaska.
-------
TABLE 2
INDUSTRIAL WASTEWATER DISCHARGE
AND VALUE ADDED BY
INDUSTRY GROUPS, 1959-68
ro
ro
Total Industrial
Wastewater Discharged,
1968 (Billions of Gal.)
Industry
Food and Kindred Products
Textile Mill Products
Lumber
Paper
Chemicals
Petroleum and Coal
Rubber
Leather
Stone, Clay, and Glass
Primary Metals
Fabricated Metals
Machinery
Electrical Equipment
Transportation Equipment
752.8
136.0
92.7
2077.6
4175.1
1217.0
128.4
14.9
218.4
4695.5
65.0
180.8
118.4
293.1
1968 Industrial 1968 Value Added
Wastewater Discharge (Deflated) as a
as a Percentage of Percentage of
1959 Discharge 1959 Value Added
131.9
113.3
73.8
113.9
136.4
101.1
107.9
125.0
82.6
132.2
158.5
109.6
134.5
128.0
130.3
122.1
99.9
133.4
181.9
178.7
137.8
143.2
116.1
122.5
148.7
157.7
242.3
179.6
-------
TABLE 3
REGIONAL INCIDENCE OF INDUSTRIAL WASTE DISCHARGE, BY MAJOR INDUSTRIAL SECTORS, 1968
PERCENT OF DISCHARGE OF INDUSTRY'S WASTEMTER. BY INDUSTRIAL WATER USE REGION
Regionally New Del.
Assignable Eng. &
Discharge Hud.
Meat Products
Dairy Products
Canned & Frozen Foods
All Other Food Products
Textile Mill Products
Paper & Allied Products
Chemical & Allied Products
Petroleum and Coal
Rubber & Plastic, n.e.c.
Primary Metals
Machinery exc. Electrica/1
Electrical Machinery
Transportation Equipment
Assignable Discharge
Percent of Industrial
Discharge, 1968
Percent of Industrial
Discharge, 1959
99.0
98.8
93.1
84.4
98.5
98.7
99.0
92.0
92.9
96.6
99.9
96.9
97.0
96.5
100.0
100.0
.5
7.5
1.4
3.7
13.5
11.9
1.2
.1
15.8
.7
14.9
9.6
31.4
93.2
3,9
4.3
4.2
4.3
3.2
5.9
4.7
3.3
7.3
26.4
7.4
6.1
34.0
18.
3.
96.7
8.3
10.7
Chesa.
Bay
2.7
4.9
2.5
.7
2.9
4.9
5.7
D
2.5
6.9
1.2
10.8
5.1
82.6
5.3
5.0
, East. Ohio Tenn.
Gr. Lak. Riv. Cum.
St. Law.
1.0
8.9
3.9
1.0
.5
3.2
6.4
5.8
35.7
17.5
4.8
8.5
33.3
95.9
10. *2
11.5
8.6
5.1
2.3
4.0
2.4
2.4
16.6
2.3
6.8
29.4
9.0
25.6
4.6
98.1
16.1
18.1
1.5
.6
D
.2
6.3
3.1
9.3
—
D
.5
.8
1.0
.6
91.5
3.8
2.5
S.E.
11.6
2.3
29.0
3.4
65.7
28.9
4.7
2.0
6.9
1.7
.7
4.1
1.7
97.8
7.7
6.9
West
Gr. Lak
2.8
12.5
5.3
9.8
D
7.8
2.7
13.0
8.4
25.2
12.5
9.0
7.1
96.1
12.7
12.1
Upper
. Miss.
30.9
24.7
2.9
14.0
.5
6.0
2.1
1.2
4.3
2.6
19.8
5.
2.1
88.7
4.1
3.5
Lower Ark.
Miss. Mo. W&R
1.7 17.9 6.7
2.8 4.3 4.7
1.9 .9 1.8
11.7 6.7 .3
1.4 — D
2.7 1.0 3.8
8.0 .4 .9
10.2 1.6 1.1
3.3 D .9
D .4 .6
.3 .2 .3
.5 .8 .9
D D .5
78.7 81.3 95.7
5.2 1.0 1.3
3.7 1.2 1.4
West.
Gulf
2.8
1.
.8
1.5
D
2.5
31.5
27.5
D
3.4
.7
D
5.0
99.3
13.3
12.3
Colo.
Basin
D
D
D
D
D
.1
D
D
D
.2
D
D
D
61.7
0.1
0.1
Gr.
Basin
D
1.3
D
D
D
D
D
.1
D
D
D
D
D
8.2
0.2
0.2
. Cal.1
3.5
7.0
20.5
20.3
.6
2.1
.6
8.4
.9
.2
.7
3.0
2.2
81.6
2.8
2.5
Pacf.2
N.W.
2.6
6.4
16.7
1.2
D
15.0
1.6
.2
D
1.2
D
D
D
87.6
4.0
3.9
1
Includes Hawaii
D = Disclosure not available due to disclosure constraints on U. S. Bureau of Census
^Includes Alaska
-------
TABLE 4
SOURCES OF INDUSTRIAL WASTE DISCHARGE, BY MAJOR INDUSTRIAL SECTORS, 1968
PERCENT OF REGIONAL DISCHARGE BY INDUSTRY
Meat Products
Dairy Products
Canned & Frozen Foods
All Other Food Products
Textile Mill Products
Paper & Allied Products
Chemical & Allied Products
Petroleum and Coal
Rubber & Plastic, n.e.c.
Primary Metals
Machinery exc. Electrical
Electrical Machinery
Transportation Equipment
Assignable Discharge
New
Eng.
.1
.7
.3
2.5
3.3
44.1
9.3
.1
3.6
5.9
4.8
2.0
16.5
93.2
Del.
.4
.2
.6
4.0
.5
5.8
25.7
26.9
.8
24.0
5.2
1.8
.8
96.7
Chesa
Bay
.4
.3
.4
.5
.5
13.4
31.7
D
.4
31.0
.3
1.7
2.0
82.6
East
Gr. Lak.
.1
.3
.3
.3 '
-
4.5
18.4
4.8
3.1
56.1
.6
.7
6.7
95.9
Ohio
Riv
.4
.1
.1
.8
.1
2.1
30.2
1.2
.4
60.1
.7
1.3
.6
98.1
Tenn.
Curab.
.3
-
-
.2
1.6
11.8
72.6
-
-
4.1
.3
.2
.4
91.5
S.E.
1.0
.1
3.2
1.5
8.1
54.6
18.0
2.3
.8
7.2
.1
.4
.5
97.8
West.
Gr. Lak.
.2
.4
.4
2.4
D
9.0
6.2
8.7
.6
65.3
1.2
.6
1.1
96.1
Upper
Miss.
5.3
2.3
.6
11.6
.1
21.4
15.0
2.5
.9
20.7
6.2
1.0
1.1
88.7
Low
Miss.
.2
.2
.3
7.6
.3
7.7
45.0
16.6
.6
D
.1
.1
D
78.7
Mo.
12.5
1.6
.8
22.6
-
14.3
12.3
13.6
D
14.0
.3
.6
D
81.3
Ark.
W&R
3.6
1.4
1.2
.7
D
42.7
20.9
7.4
.6
15.5
.3
.6
.8
95.7
West.
Gulf
.1
-
-
.4
D
2.7
69.2
17.6
D
8.4
.1
D
.8
99.9
Colo.
Basin
D
D
D
D
-
D
15.3
D
-
46.4
D
D
D
61.7
Gr.
Bas.
D
2.6
D
D
-
-
D
5.6
D
D
D
D
D
8.
Cal.
1.1
1.2
7.8
9.1
.3
14.1
8.5
32.4
.4
3.2
.4
1.1
2.0
81.6
Pacf.
N.W.
5
£
38
1.1
D
585
123
5
D
103
D
D
D
87 £
-------
With the exception of the petroleum industry in the Delaware-Hudson and
California regions, paper, chemicals, and primary metals are the princi-
pal sources of industrial discharges. Clearly, these industries in the
industrialized areas create the largest demand for curtailment of waste
discharges.
Industrial Waste Treatment. 1959-1968
Although industrial wastewater discharge has not grown as rapidly as
industrial production—and the gap between the two rates of growth has
widened —the volume of industrial waste discharge must still be handled
to attain, or maintain, acceptable levels of water quality. Four
broad methods of curtailing the polluting effects of industrial liquid-
borne wastes can be distinguished; (1) Waste treatment facilities can be
added prior to discharge; (2) A plant can also discharge its wastes to a
sewer and thereby place the responsibility for treatment upon a political
jurisdiction; (3) Application to land, either through surface irrigation or
well injection, can be a very thorough treatment technique, provided that
precautions to prevent ground water contamination or run-off of pollutants
are exercised; (4) Process change is, from both an environmental and admini-
strative standpoint, perhaps the most attractive technique because of its
reliability, predictability, and potential for recycling of waste materials.
Process change, though, is part of the economics of water use generally.
Accordingly, a discussion of process change is deferred to a later chapter
which concerns water as an industrial input.
Superficial inspection of Tables 5 and 6 suggests that progress in the
treatment of wastes by industry has been made during the last decade.
In 1968, over 30 percent of industrial wastewater was reported to have
received some kind of treatment performed by industry. This represents
an increase of about 87 percent in treated discharge since 1959. In all
regions and for most industries, the amount of wastewater treatment per-
formed by manufacturers increased both absolutely and relative to total
discharge over the period. Based on a consideration of the development
of water quality standards, greater regulatory activity and other develop-
ments discussed in the previous section, these findings might be expected.
It cannot, however, be inferred from these data that the amount of indus-
trial pollutants reaching water has necessarily decreased.
4 Excluding Alaska and Hawaii, between 1959 and 1964 value added
(in constant dollars) grew at an annual rate of 2.2 percent and industrial
discharge grew at a rate of 2.7 percent; but between 1964 and 1968 value
added grew at a rate of 4.8 percent which exceeds the 2.1 percent rate
of growth of discharge by a wide enough margin to give the entire decade
a creditable showing with respect to water productivity in manufacturing.
25
-------
TABLE 5
PERCENTAGE OF INDUSTRIAL WASTEWATER RECEIVING TREATMENT AND GROWTH IN
TREATMENT BY INDUSTRIAL WATER USE REGIONS, 1959-68
Industrial Wastewater Discharge
ro
cr>
Water Use Region
New England
Delaware-Hudson
Chesapeake Bay
Ohio
Eastern Great Lakes
Tennessee-Cumberland
Southeast
Western Great Lakes
Upper Mississippi
Lower Mississippi
Missouri
Arkansas-White-Red
Western Gulf
Colorado Basin
Great Basin
California
Pacific Northwest
National3
Annual Rate of Growth
of Treated Discharge
19591
Percent Treated
1964^
1968
1959-68 1959-64
1964-68
4.7
25.0
24.5
14.5
20.3
18.0
17.3
19.4
16.9
6.4
16.5
30.9
31.3
14.3
13.0
51.8
14.3
20.3
11.4
40.2
25.6
17.7
31.7
31.3
36.8
34.8
35.0
23.8
48.1
50.6
22.6
31.3
58.6
59.7
29.6
29.2
10.0
42.0
28.5
23.3
22.0
26.4
43.1
41.7
23.7
21.0
45.5
67.0
23.2
19.1
42.9
55.4
36.3
30.4
10.4
5.7
5.1
6.6
2.2
11.8
14.9
12.2
8.2
21.6
12.2
10.6
.1
14.9
16.1
1.9
13.1
7.2
19.1
9.6
5.8
6.7
11.6
19.6
19.3
15.3
21.0
38.0
22.0
15.2
-2.6
38.0
41.0
5.3
20.0
10.5
.4
.8
4.1
6.5
-8.3
2.9
9.6
8.5
™O • 0
2.9
1.0
8.9
3.5
-8.5
-9.3
-2.2
4.8
3.1
1 Volume of treated discharge derived from 1958 Census of Manufacturers.
2Volume of treated discharge derived from 1963 Census of Manufacturers.
^Excludes Alaska and Hawaii.
-------
TABLE 6
ro
PERCENTAGE OF INDUSTRIAL WASTEWATER RECEIVING
TREATMENT AND GROWTH IN TREATMENT BY
INDUSTRY GROUPS, 1959-68
Percent of Industrial
Wastewater Pischarge Treated
^•^••—•—•-^••-••1 . J • • !>&•—•-•—•.•_! Ill •—•-»•
Annual Rate of Growth
of Treated Discharge
Industry Group
Food and Kindred Products
Textile Mill Products
Lumber
Paper
Chemicals
Petroleum and Coal
Rubber
Leather
Stone, Clay and Glass
Primary Metals
Fabricated Metals
Machinery
Electrical Equipment
Transportation Equipment
1959
13.0
14.2
24.6
41.8
16.3
54.5
3.4
16.7
4.2
15.1
7.3
18.8
8.0
9.6
• 1964 '
22.9
25.9
27.6
36.4
16.0
76.4
7.8
63.6
18.8
26.9
12.0
8.0
17.0
10.3
1968
24.6
39.7
20.4
44.0
16.1
75.4
5.4
66.7
16.5
30.8
13.8
13.8
23.7
7.8
1959-68
10.7
13.7
-5.3
2.1
3.4
3.8
6.4
19.6
14.1
11.5
13.0
-2.3
16.7
.5
1959-64
16.4
15.5
1.9
-1
3.4
8.9
17.6
28.5
30.0
16.7
14.9
-17.4
16.5
1.8
1964-68
4.0
11.5
-13.5
6.7
3.4
-1.8
-6.3
9.3
-3.2
5.4
10.7
20.0
16.9
-1.1
-------
Available data do not permit estimation of the degree of treatment
received by final industrial waste discharge. In the absence of
inventories of industrial treatment facilities analagous to the
Municipal Waste Inventories, it is presently impossible to estimate
the amount and rate of change of the discharge of industrial liquid-
borne pollutants.
Another reason that the apparent increases in wastewater treatment by
industry do not necessarily imply a decrease in industrial pollutants
is that treatment of industrial wastewater is often a requirement for
discharge to sewers. As presented in the 1968 Water Use in Manufacturing.
the data did not allow an estimate of treatment prior to sewer discharge
or application to land. In 1964 the volume of industrial waste receiving
treatment prior to discharge to sewers or ground appears to have been
about 5 percent of the total treated discharge. This percentage may have
increased by 1968 because of the growth in municipal waste treatment and
associated pretreatment requirements for industrial connections.
One disturbing finding which emerges from an examination of the data
over the period 1959 to 1968 is that treatment of wastes by industry
grew at a considerably faster rate from 1959 to 1964 (10.5 percent
annual rate) than from 1964 to 1968 (only a 3.1 percent annual rate,
cf. Table 5). In fact, in five of the seventeen water use regions and
five of the fourteen industries there was both a relative and absolute
decline in the amount of industrial wastewater receiving some kind of
treatment over the period 1964-1968. As a consequence of the differing
rates of growth in treatments the amount of untreated wastewater dis-
charged by industry grew at an annual rate of 1.6 percent over the 1964-
1968 period, even though total discharge of industrial wastewater grew
at a slower rate in the later period (2.1 percent annual rate of growth)
than in the earlier period (2.8 percent). The nature and detail of avail-
able data do not permit an investigation as to the many possible reasons
for the decline in the rate of growth of industrial wastewater treatment.
However, the period 1964-1968 experienced generally increasing rates of
interest which, because the rate of interest is an integral part of the
cost of capital investments to industry, may have discouraged or post-
poned investment generally and investment for industrial treatment
facilities in particular. Another conjecture which might bear on the
decline in the rate of growth of industrial treatment concerns the
responses of firms to increased scarcity of fresh water for industrial
use and increased regulatory pressures. More stringent effluent require-
ments and increased enforcement of such requirements provide an incentive
to industry to amend production processes to curtail the production of
liquid-borne pollutants and/or to find profitable uses for the would-be
waste discharges. Also, while regulatory constraints on industrial
discharges have become tighter, the demand on available water supplies
has increased, which provides an incentive to economize on water intake
and discharge. The total effect of these pressures may have been to
28
-------
drive below the 20 mi 11 ion-gallons-a-year threshold some of the
establishments which had reported in the Water Use in Manufacturing
series prior to 1968. Thus, these establishments did not report in the
1968 survey. In other words, establishments which significantly altered
processes to decrease the amount of their discharge to be treated may
have thereby eliminated themselves from the request to report their
discharges and associated amount of treatment to the Bureau of the Census,
and decreased the apparent rate1of growth in industrial wastewater treatment.
It should also be noted that quantitative representations of wastewater
treated over time may not be an accurate indication of growth. Industrial
management's view of what constitutes treatment is unconstrained by
definition, so that waste-amending practices tend in all cases to be
reported as treatment. But as waste treatment requirements become more
stringent, intake economies and segregation modify utilization practices
in such fashion that the amount of wastewater treated declines in rough
proportion to the intensity of treatment. (For example—a factory in
which water application is divided equally among cooling, process, and
sanitary purposes might have discharged in 1959 through a common outfall,
with coarse screening the only treatment provided, and have reported treat-
ment of 100 percent of its aqueous wastes; by 1968, as a result of regu-
latory pressures, the same factory might be discharging sanitary wastes
to a public sewer, discharging once through cooling waters through a
separate outfall to prevent contamination by other wastewaters and pro-
viding a high degree of treatment to process wastes, yet report—quite
accurately—that only 33 percent of its wastes were treated.) To what
extent such considerations are reflected in the apparent slowing of waste
treatment growth we cannot guess.
Public Treatment of Industrial Wastes
Discharge of industrial wastewater to public sewers places the require-
ment for adequate waste treatment upon local public agencies responsible
for municipal waste treatment. As wastewater treatment at the secondary
level (i.e., about 80 to 90 percent BOD reduction) or above becomes
more prevalent among municipalities, the degree of treatment of sewered
industrial wastewater should generally increase. However, as municipal-
ities raise their target rates of waste removal, they must become more
discriminating about the types and timing of industrial discharges that
they will accept in order to prevent adverse consequences on the operation
of their treatment works. Increased selectivity of acceptable discharge
to sewers generally means outright prohibition on the discharges of
certain industrial residuals and/or pretreatment requirements. For the
sewered manufacturing plant, greater selectivity can translate into
separation of waste streams and/or treatment of discharges bound for
the sewer, both of which entail an increase in costs. From the data
reported in the Mater Use in Manufacturing series it appears that these
29
-------
developments have been an offset to the subsidies provided by Federal
and State grants for municipal wastewater treatment plant construction.
From 1959 to 1968 the percentage of industrial wastewater discharged
to sewers declined from 8.7 percent to 7.2 percent (cf. Table 7).
However, all of this decline took place in the 1959-1964 period, and
over the 1964-1968 span relative discharge to sewers remained virtually
constant, with the absolute amount of sewered discharge increasing
slightly. Although the relative amount of industrial discharge going to
sewers is rather small, it can be inferred from Table 8 that municipal
waste treatment is the primary method of curtailing industrial liquid-
borne pollutants from the food processing, textiles, rubber, leather,
and the various metal manufacturing industries.
(The percentages in Table 8 probably understate the relative amount of
industrial discharge going to sewers by a percentage point because
municipal waste treatment is also the primary method by which the water-
borne wastes of minor urban manufacturing establishments whose intake is
less than, 20 million gallons a year are handled.)
Ground Disposal of Industrial Wastes
Discharge to the ground can be an effective method of treating
industrial wastewater. Direct application to land utilizes the
evaporative powers of the atmosphere and the filtering action of soil
and rock strata to eliminate and purify industrial wastewater. Deep-
well injection is a method of withholding and isolating particularly
dangerous or conservative industrial wastes from surface streams. The
use of disposal to land as a technique is constrained by the cost and
availability of land, the possible contamination of ground waters, and
the possible nuisances of noxious odors and aesthetic degradation.
However, as long as proper precautions are taken, applications to land
are valuable in cleansing and recycling liquid industrial discharge.
Discharge of industrial wastewater to the ground is not a prevalent
disposal technique; according to the data presented in the Water Use
In Manufacturing, 1968 only 1.3 percent of industrial wastewater was
discharged to the ground (cf. Table 9). The use of land as a disposal
medium has grown however, between 1959 and 1968 industrial discharges
•going to the ground grew at an annual rate of 7.8 percent. From Table 9
it appears that ground discharge is a significant technique of disposal
in the sparsely populated and arid regions of the Colorado Basin and
Great Basin, where the wastes may have an economic value for irrigation
use. Ground discharge is generally least used in the humid and often
densely populated areas east of the Mississippi River and in the Western
Gulf. Among industries, the food and kindred industry group discharged
the largest percentage of its wastewater to the ground—5.8 percent in
1968 (cf. Table 10) — and the chemicals and primary metals groups dis-
charged to the ground 40.3 billion gallons and 38.1 billion gallons,
respectively.
30
-------
TABLE 7
PERCENTAGE OF INDUSTRIAL WASTEWATER DISCHARGED
TO SEWERS AND GROWTH OF SEWERED DISCHARGE
BY INDUSTRIAL WATER USE REGION, 1959-68
Industrial Wastewater Discharge
Percent Discharged to Sewers
Annual Rate of Growth of
Sewered Discharge
Water Use Region
New England
Delaware-Hudson
Chesapeake Bay
Ohio
Eastern Great Lakes
Tennessee-Cumberl and
Southeast
Western Great Lakes
Upper Mississippi
Lower Mississippi
Missouri
Arkansas-White-Red
Western Gulf
Colorado Basin
Great Basin
California
Pacific Northwest
National1
1959
12.6
7.4
5.0
5.4
10.1
3.5
5.0
17.7
26.4
6.4
20.1
4.9
.9
42.9
4.4
15.1
9.6
8.7
1964
10.0
4.0
5.6
7.1
10.7
2.7
5.4
9.8
21.1
3.5
27.9
8.0
.8
25.0
6.9
15.1
6.7
7.3
1968
8.4
7.3
4.3
7.5
13.9
2.6
5.2
7.4
18.5
3.1
17.8
7.9
.8
20.2
6.3
16.8
5.7
7.2
1959-1968
-3.0
- .4
1.7
4.9
4.9
3.7
4.3
-6.5
.2
-1.9
-1.2
6.8
1.7
2.4
6.1
2.3
-3.8
.3
1959-1964
-5.0
-11.8
7.4
8.2
3.1
1.9
4.3
-8.9
- .4
-5.8
5.1
11.8
1.5
5.9
14.9
2.2
-3.5
- .9
1964-1968
-.5
16.1
-5.1
.8
7.1
6.0
4.3
-3.3
.9
3.2
-8.5
.7
2.1
-2.0
-4.0
2.5
-4.5
1.9
1
Excludes Alaska and Hawaii.
-------
TABLE 8
CO
PERCENTAGE OF INDUSTRIAL WASTEWATER DISCHARGED
TO SEWERS AND GROWTH OF SEWERED DISCHARGE BY
INDUSTRY GROUPS, 1959-68
Industrial Wastewater Discharge
Percent Discharged to Sewers
Annual Rate of Growth of
Sewered Discharge
Industry Group
Food and Kindred Products
Textile Mill Products
Lumber
Paper
Chemicals
Petroleum and Coal
Rubber
Leather
Stone, Clay and Glass
Primary Metals
Fabricated Metals
Machinery
Electrical Equipment
Transportation Equipment
1959
^^^•»«^»H^M«^..^^^_«B^^^MI»n
36.6
31.7
6.3
4.4
3.5
.9
19.3
50.0
8.0
7.4
70.7
22.4
46.6
36.2
1964
!•!» ™ ••^-^^^^•^•(•"""•i"—™"**
35.0
32.6
3.3
4.2
4.2
2.4
15.5
63.6
8.7
3.6
64.0
26.8
53.8
33.3
1968
• 1^ irilllM 1IIIMI *!!!• •!••• 1 ~T ~ ~ ~ l~
31.6
37.2
2.7
3.5
4.3
.6
17.4
68.0
9.4
3.1
59.4
24.6
62.8
26.3
1959-1968
- — - — — -- — — • — — — — — — — —
1.4
3.2
-12.1
- 1.2
6.0
- 4.1
- .3
6.1
••• » ^5
- 6.5
3.2
2.1
6.8
- .8
1959-1964
^^M^MW^«^V4H^V^^M«WMV^^^^^^BV*^
2.9
3.0
-13.0
0
7.4
23.0
.9
3.1
- 2.0
- 9.8
2.0
1.6
3.6
- 1.0
1964-1968
•M^^^^^MBM^».^»M^BM^B-^V4l*wm»
- .3
3.6
-11.1
- 2.7
4.3
-43.0
- 1.7
9.9
1.8
- 2.2
4.8
2.7
11.0
- .6
-------
TABLE 9
CO
CO
PERCENTAGE OF INDUSTRIAL WASTEWATER DISCHARGED TO
THE GROUND AND GROWTH OF GROUND DISCHARGE BY
INDUSTRIAL WATER USE REGIONS, 1959-68
Industrial Wastewater Discharge
Percent Discharged to Ground
Annual Rate of Growth of
Discharge to Ground
Water Use Region
New England
Delaware-Hudson
Chesapeake Bay
Ohio
Eastern Great Lakes
Tennessee-Cumberl and
Southeast
Western Great Lakes
Upper Mississippi
Lower Mississippi
Missouri
Arkansas-Whi te-Red
Western Gulf
Colorado-Basin
Great Basin
California
Pacific Northwest
National1
1959
.4
1.1
1.2
.6
.6
.4
.9
.4
1.7
.2
.7
1.2
.2
28.6
N.R3
4.6
2.2
.8
1964
.4
1.3
1.5
.6
.6
2.5
1.3
.5
1.2
.5
1.6
1.7
.1
6.3
6.9
6.0
3.7
1.1
1968
.9
1.5
.6
.5
.5
.3
1.7
.6
4.3
1.5
1.4
2.8
.5
44.3
21.3
6.1
4.1
1.3
1959-1968
10.9
3.7
1.7
- .3
- 1.8
6.8
11.3
6.6
15.1
35.0
8.0
11.2
13.0
16.8
N.R3
4.3
10.8
7.8
1959-1964
0
4.2
7.4
2.9
2.40
N.C2
11.4
5.9
- 3.0
25.0
14.9
8.4
- 7.8
-12.9
N.R3
7.9
14.9
7.7
1964-1968
26.0
3.0
- 5.0
- 4.5
- 6.8,
N.(T
11.3
7.5
43.0
39.0
0
14.7
N.C2
N.C2
30.0
0
5.9
7.9
Excludes Alaska and Hawaii.
2Exceeds 50 percent in absolute value.
^Calculation not possible because the necessary datum was not reported.
-------
TABLE 10
CO
PERCENTAGE OF INDUSTRIAL WASTEWATER DISCHARGED TO
THE GROUND AND GROWTH OF GROUND DISCHARGE
BY INDUSTRY GROUPS, 1959-68
Industrial Waste Discharge
Percent Discharged to Ground
Annual Rate of Growth of
Discharge to Ground
Industry Group
Food and Kindred Products
Textile Mill Products
Lumber
Paper
Chemicals
Petroleum and Coal
Rubber
Leather
Stone, Clay and Glass
Primary Metals
Electrical Equipment
Transportation Equipment
1959
4.2
1.7
1.6
.5
.6
.4
1.7
8.3
1.9
.6
1.1
1.7
1964
11.5
3.7
2.4
.6
1.0
.4
1.7
0
8.3
1.3
3.4
2.1
1968
5.8
1.0
4.1
.8
1.0
1.1
2.0
2.7
5.3
.9
3.3
2.5
1959-1968
6.8
-3.9
7.4
6.5
8.7
11.5
2.5
-9.7
9.8
5.4
14.9
6.9
1959-1964
27.0
20.0
8.4
4.1
14.9
0
0
--
29.0
14.9
24.6
4.6
1964-1968
-13.9
-27.3
6.1
9.7
1.5
28.0
5.7
--
-10.4
- 5.4
6.1
9.9
-------
II
PROCESS AND THE USE OF WATER IN INDUSTRY
Introduction
The chapter considers the utility of water as an industrial raw material,
the increasing intensity of its application, the substitution of capital
for water inputs, and the relationship of these phenomena to water quality
and effluent treatment.
Summation
The real price of water--measured by its scarcity and the cost of its
application—is increasing for industry. In consequence, manufacturers
are using it with growing intensity. Use of capital to provide more
effective utilization of each intake unit at each application and.to
increase the number of applications by recycling is indicated by positive
correlations between growth of output per intake gallon with (a) growth of
output, and (b) water scarcity. Neither characteristic correlates with
growth of industrial waste treatment, suggesting that management response
to an increase in the price of water is limited to each firm's internal
operations and does not extend to measures that will reduce prices for
society as a whole. Nevertheless, increased demand for water leads to
processing methods that result in reduced dependence on the available
supply, thus supplement!'ng--and in some degree substituting for—the
effect of waste treatment.
35
-------
PROCESS CHANGE AND THE USE OF WATER IN INDUSTRY
Utility of Water in Manufacturing
In 1968 about 15.5 trillion gallons of water were withdrawn in the United
States by manufacturers (cf. Table 11)—an increase of 27.5 percent from
1959. According to U.S. Geological Survey sources, industry, exclusive
of electrical utilities, accounted for 14.5 percent of withdrawals in the
United States from 1950 to 1965. Water provides a number of productive
services within manufacturing processes. A number of products, notably
beverages and prepared foods, incorporate water directly into the product.
Water can be used to transport materials in a manufacturing process; for
example, water is used to carry partially prepared fruits and vegetables
between stages of production. But the most common„use of water by indus-
try is to transport or flush away residual matter,"the inevitable by-pro-
ducts of manufacturing processes that must" be carried away in order to
prevent counter-productive effects.
Much of the intake of water by industry is directly toward cooling; in
1968, the percentage of initial intake for the purpose of cooling amounted
to 65.5 percent (cf. Table 12). Cooling water is used to absorb the heat
arising from the difference between thermal energy generated and that
used in production. The heat, in turn, can be identified as a residual
from industrial production. Although cooling tends to be,the major.use of
water in industry, process water carried almost all resjduals other than
heat. " Respondents in the Conference Board survey indicated that 93:4'
percent of the BOD, 89 percent of chemical oxygen demand (COD), and 85
percent of suspended solids contained in their wastewater were contributed
directly by the production process. Table 12 indicates waste concentra-
tions in process water, generally highest for paper and allied products.
Clearly, it is the use of water directly in the production process which
creates a need for curtailment of the amount of residuals discharged to
waterways.
Process Change—An Alternative to Treatment
The trends presented in the previous chapter indicated that wastewater
treatment by industry has increased over the past decade, but that con-
siderable increases in the amound and, probably, the degree of wastewater
treatment are necessary in order to meet current regulatory standards
for waterways. An alternative to end-of-stream treatment as a method
for reducing the discharge of liquid-borne residuals is alteration of
production processes so thatthe production of residuals decreases.
Process change can involve adoption of known low-residual techniques,
development of new techniques, alteration of product lines from high-
residual to low-residual goods, and use of low-residual raw materials.
36
-------
GO
TABLE 11
VOLUME OF INTAKE AND PERCENT
CONSUMED BY INDUSTRY GROUPS, 1968
Intake, 1968 Percent
Industry (Billions of Gallons) Consumed, 1968
Food and Kindred Products
Textile Mill Products
Lumber
Paper
Chemicals
Petroleum and Coal
Rubber
Leather
Stone, Clay, and Glass
Primary Metals
Fabricated Metals
Machinery
Electrical Equipment
Transportation Equipment
All Manufacturing
811
154
118
2252
4476
1435
135
16
251
5005
68
189
. 127
313
15467
7.2
11.7
21.2
7.7
6.7
15.2
5.2
6.3
13.1
6.2
4.4
4.2
7.1
6.4
9.6
-------
TABLE 12
COMPOSITION OF INDUSTRIAL WATER INTAKE AND WASTE CONCENTRATION BY INDUSTRY GROUPS
1968
u>
co
PERCENT OF INTAKE, 1968
WASTE CONCENTRATION OF PROCESS
WATER (in p.p.m.)1
Industry
Food and Kindred Products
Textile Mill Products
Paper
Chemicals
Petroleum and Coal
Rubber
Primary Metals
Fabricated Metals
Machinery
Electrical Equipment
Transportation Equipment
All Manufacturing
Cooling
52.6
15.3
28.9
78.9
85.7
70.9
72.6
28.4
72.0
38.4
25.6
65.5
Process
35.8
70.7
65.6
16.4
6.6
17.6
24.1
54.8
15.3
36.8
20.2
27.8
Other
11.6
14.0
5.5
4.7
7.7
11.5
3.3
16.8
12.7
24.8
54.2
6.7
BOD
87
304
336
130
52
17
18
N.A.2
N.A.
N.A.
N.A.
N.A.
COD
114
327
3565
378
210
57
80
N.A.
N.A.
N.A.
N.A.
N.A.
SS
703
70
388
225
76
30
259
N.A.
N.A.
N.A.
N.A.
N.A.
1
Source: Conference Board Survey of 800 manufacturing establishments.
?
N.A.--not available.
-------
Most of the documented cases of process changes which reduced the
pollutant loadings per unit of product indicate that the reduction in
wastes produced was fortuitous rather than deliberate. For example,
in the pulp and paper industry the substitution of the sulfate process
for the older and much more residual-intensive sulfite process has
occurred primarily because the newer process effects lower unit costs of
production than the older process. The consequent decrease in residuals
production has been, from the point of view of the pulp producer, an
incidental benefit.
One piece of evidence suggests that firms are directing investments
toward process change in order to reduce waste loadings. The survey
on water pollution abatement costs conducted by the Conference Board'
indicates that 27.9 percent of capital expenditures for water pollution
control by the sampled plants were for manufacturing changes to reduce
water pollution. This percentage varied from 35.6 percent in paper and
allied products to 2.8 percent in textile mill products.
Lack of data prevents an analysis and evaluation of the extent and changes
over time in alterations of production process that reduce the amount of
residuals generated. Only a few case studies of process change exist,
and these have generally examined plants in which a dramatic change in
production technique was instituted. Most process changes, like tech-
nological progress in industry generally, tend to be incremental and
cumulative. No systematic and inclusive collection of data related to
process change over time (for example, investment for process change
and waste loads produced) has ever been undertaken, and, thus, direct
assessment of the rate of process change and its effects on waste load-
ings is not possible.
Indirect inferences concerning changes in the pollutant content of
industry's discharged wastewater can be made by examining changes in
the intake, use and discharge of water over time in industry. As stated
in an earlier volume in this series of reports to the Congress, "there
is an indication that reduction in volume of wastewater is often accom-
panied by a reduction in the volume of pollutants discharged. While
concentrations of pollutants might, in the normal order of things, be
expected to rise in direct proportion to the decline in the volume of
carrving liquid, this is simply not the case for industry as a whole.
The reason is that operating practices—"good housekeeping"—have a high
degree of influence on the volume of wastes produced in a factory; and
U. S. Environmental Protection Agency, The Economics of Clean Hater,
Vol. Ill, January 1972.
39
-------
when hydraulic controls are tightened there is a corollary reduction in
materials losses. In addition to this influence on waste volume, there
are direct reductions attributable to engineering improvement specifically
aimed at materials reclamation."2 in other words, economizing on water
intake, and thus discharge, is often accompanied by increased attention
to the production and handling of water-borne residuals, and materials
control generally, which have a negative effect on the amount of
pollutants discharged.
In addition to having a generally depressing influence on the production
of residuals, economizing on water intake will have beneficial effects
for environmental enhancement and protection. Water not withdrawn for
the purpose of residual elimination means more water is available in
streams for assimilative processes. Recycling and reuse of water is a
common method of economizing on water intake per unit of product.
Recycling of water can cause an increase in the concentration of pol-
lutants in industrial wastewater which generally lowers the cost of
treatment per unit of waste and cheapens the cost of by-product recovery.
The trends in water intake for industrial water use regions and industry
groups reported in Tables 13 and 14 indicate that water intake increased
over time for all regions and for most industries. This finding is not'
surprising, given the growth in production in the economy over the
period 1959-1968. However, growth in production alone hardly accounts
for differences in the trends in water intake across regions and across
industries; the percentages of variation in water intake growth explained
by growth in value added are only 18 and 21 percent for regions and for
industries, respectively, neither of which is different from zero by the
usual tests of statistical significance. In other words, growth in water
withdrawals by industry has not been primarily conditioned by growth in
industrial production.
Examination of the ratio of growth in value added (in constant dollar)
to growth in water intake (-cf. Tables 13 and 14 ) indicates that
production has generally grown more rapidly than water intake. Produc-
tivity, which is most often defined with respect to labor, can be defined
as the ratio of the rate of growth of output to the input in question.
The sources of productivity increases are improvements in the quality of
the input, increased application or substitution of other inputs,
and technological progress, by which is meant improvements in products
and production processes. Although the treatment of wastewaters dis-
charged to surface streams has increased in both volume and degree, it
2U. S. Department of the Interior, Federal Water Pollution Control
Administration, The Cost of Clean Water, Vol. II (U. S. Government
Printing Office, 1968), p. 82
40
-------
TABLE 13
TRENDS IN INDUSTRIAL WATER INTAKE
AND IN MEASURES OF PROCESS CHANGE BY
INDUSTRIAL WATER USE REGIONS, 1959-1968
x
x
1968 as a Percentage of 1959
New England
Middle Atlantic1
Ohio
Eastern Great Lakes
Tennessee-Cumber! and
Southeast
Western Great Lakes
Upper Mississippi
Lower Mississippi
Missouri
Arkansas-Whi te-Red
Western Gulf
Colorado Basin
Great Basin
California
Pacific Northwest
National2
Intake
105.3
110.7
114.3
117.5
187.3
138.4
135.6
157.6
178.2
108.2
120.3
136.4
122.6
113.9
113.5
128.1
126.9
UK J ^^ IA f*. *h tfk Uh *± ^ If f
Value Added Value Added Value Added Recycle
(Deflated) /Intake (Deflated)XUse (Deflated)/Discharge Ratio,1968
125.0
109.8
116.4
102.4
104.7
117.1
102.4
83.4
100.4
136.3
87.0
136.2
209.3
157.8
136.0
124.4
109.2
& B •* * *
108.8
128.8
105.1
94.9
127.9
97.6
114.7
83.8
99.5
121.6
89.4
117.7-
227.5
118.5
121.7
104.5
103.5
116.4
110.0
119.7
107.4
105.8
115.7
104.2
90.8
101.9
144.5
92.1
136.8
98.2
154.2
139.6
133.6
111.2
1.65
1.78
1.68
1.72
1.85
3.15
1.52
2.18
2.30
3.56
6.93
3.49
6.15
5.50
4.09
2.82
2.31
^Excludes Alaska and Hawaii.
-------
ro
TABLE 14
TRENDS IN INDUSTRIAL WATER INTAKE AND IN
MEASURES OF PROCESS CHANGE BY INDUSTRY
GROUPS, 1959-68
1968 as a Percentage of 1959
Intake
Food and Kindred Products
Textile Mill Products
Lumber
Paper
Chemicals
Petroleum and Coal
Rubber and Plastics
Leather
Stone, Clay and Glass
Primary Metals
Fabricated Metals
Machinery
Electrical Equipment
Transportation Equipment
130.0
114.1
84.3
116.3
138.1
108.8
106.3
133.3
100.0
135.2
154.5
110.5
136.6
120.4
Value Added Value Added Value Added Recycle
(Deflated)/Intake (Delfated)/Use (Deflated)/Discharge Ratio, 1968
100.2
123.5
118.5
106.8
122.0
163.1
129.6
107.4
116.1
90.2
96.2
141.7
159.4
119.4
125.6
78.2
89.7
115.1
93.5
140.8
111.7
100.2
115.9
89.0
62.4
116.3
93.6
82.4
98.8
124.3
135.3
109.0
123.5
175,6
128.1
114.6
116.9
92.3
93.8
142.8
162.4
112.4
1.66
2.13
1.74
2.90
2.10
5.08
1.99
1.25
1.64
1.55
2.48
1.79
2.91
2.91
-------
is unlikely that stream quality has increased to the point where less
water per unit of product is needed. Instead, increased deterioration
of surface waterbodies can lead to an increase in water productivity:
decreased quality of intake can lead to increased treatment prior to
application, which effectively raises the cost of utilizing an additional
unit of water and provides an incentive to economize on intake. It would
appear, then, that the increased productivity of water in industry is
attributable to substitution of other inputs (primarily capital and less
pollutional raw materials) and improvements in production technique.
Similarly, the ratio of the growth in value added (deflated) to the
growth in industrial wastewater discharge generally increased over the
1959-1968 period. In fact, for most of the regions and industries this
ratio grew at a slightly faster rate than did the ratio of value added
to intake. (Water use is defined as the quantity of water that would
have been required if no water were recirculated or reused, less con-
sumption and evaporative loss.) Use measures the actual application of
water in production processes. From Tables 13 and 14 no clear pattern
emerges with respect to the growth of value added relative to use; in-
creases and decreases in this ratio are almost ewually numerous across
regions and industries although nationally there was a slight trend
toward using less water per (constant) dollar of production.
Clearly, there has been a discernable, and appratently deliberate, effort
by industry to economize on water intake. Additionally, casual inspection
of the first and second columns of Tables 13 and 14 shows that there has
been considerable variation between regions and industries with respect
to trends in intake and productivity of intake. These trends are consis-
tent with the proposition that water is not treated as a freely available
commodity by industry. What, then, have been the incentives which have
led industry to economize on water intake?
Influences on Process Modification
One possibility is that incentives to economize on water use emanate from
the price of water and product demand. To examine this possibility, the
sixteen industrial water use regions were cross-classified by (1) regional
growth in value added being above or below the median value and (2) the
ratio of total freshwater withdrawals in 1965 to median available sup-
plies being above or below the median value. Averages of the magnitudes
of interest for each category were computed and are reported in Tables
15 through 17. The price of water to industry cannot be directly mea-
sured because most of the water used in industry is self-supplied;
according to Census sources, 87.2 percent of freshwater intake and 89.7
percent of total intake came from company sources in 1968. However, it
is highly likely that as withdrawals of freshwater, both from surface
and ground sources, increase relative to available supplies, the cost of
43
-------
securing an additional unit of water will increase. In other words,
increased demand for water relative to supply will, de facto, increase
the implicit price of water to industry.
The averages reported in Tables 15 through 17 indicate that the pressure
on available supplies of fresh water and growth in value added have
provided incentives to industry to economize on water.3 intake increased
most rapidly for regions which experienced above average growth in pro-
duction but increased more slowly for regions in which pressures on
water supplies were above the average (cf. Table 15). Growth in the
ratio of value added to water intake, a measure of the productivity
of water in industry, was higher for the faster growing regions and
for regions in which water demand relative to supply was above average
(cf. Table 16). Recycling and reuse of water is a prevalent method of
economizing on industrial water intake. The results in Table 17 indicate
that, excluding the Arkansas-White-Red region from the computations,
the recycle is a positive function of both growth in product demand and
the implicit price of water. Thus, it appears that the incentives for
economizing on water in industry are much the same as those for any
other industrial input.5
An interesting question arises from this conclusion: namely, do the
same incentives which, in part, guide industrial water intake and use
influence the amount of wastewater treatment performed by industry?
Based on the same type of analysis, the answer to this question is
negative. Tables 18 through 20 show that there is no consistent pattern
among different measures of increases in industrial waste treatment
(i.e., the ratio of treated discharge to total discharge in 1968, the
growth in the ratio of treated discharge to total discharge from 1959
to 1968, and the growth in treated discharge from 1959 to 1968) and
o
There is a high degree of confidence that the ROW averages are
different from one another as are the column averages. In the language
of the statistician, difference between ROW means and differences between
column means are significantly different from zero at the .10 level.
4The Arkansas-White-Red region, which had the highest computed re-
cycle ratio among the regions, deviates from the relationship between
recycling and the growth in production and the pressure on available
freshwater supplies. One possible reason for this deviance is that much
of the surface water in this region is acknowledged to be of poor quality
which, in turn, increases the need for treatment prior to application.
The treatment is an additional cost of using the water which creates an
incentive for further recycling.
c
A multiple regression analysis using value added and the ratio of
withdrawals to available supplies as explanatory variables also supports
t.hi<; rnnrlu<;irm.
this conclusion.
44
-------
TABLE 15
AVERAGE OF 1968 INTAKE AS A PERCENTAGE OF 1959 INTAKE
FOR INDUSTRIAL WATER USE REGIONS CLASSIFIED
BY RATIO OF WITHDRAWALS TO MEDIAN WATER
SUPPLY AND GROWTH IN VALUE ADDED
RATIO OF WITHDRAWALS TO MEDIAN
AVAILABLE SUPPLY. 1965
ROW MEAN
Growth in
Value Added, 1959-68
BELOW MEDIAN
ABOVE MEDIAN
COLUMN MEAN
Below Median
123.5
158.0
141.1
Above Median
118.9
121.6
120.3
123.5
140.1
TABLE 16
AVERAGE OF 1968 VALUE ADDED/INTAKE AS A PERCENTAGE OF 1959 VALUE
ADDED/INTAKE FOR INDUSTRIAL WATER USE REGIONS CLASSIFIED BY RATIO
OF WITHDRAWALS TO MEDIAN WATER SUPPLY AND GROWTH IN VALUE ADDED
RATIO OF WITHDRAWALS TO MEDIAN
AVAILABLE SUPPLY. 1965
ROW MEAN
Growth in
Value Added, 1959-68
BELOW MEDIAN
ABOVE MEDIAN
COLUMN MEAN
Below Median
101.3
111.7
106.8
Above Median
113.7
159.8
137.0
107.8
136.1
TABLE 17
AVERAGE OF 1968 RECYCLE RATIO FOR INDUSTRIAL WATER USE REGIONS
CLASSIFIED BY RATIO OF WITHDRAWALS TO MEDIAN WATER SUPPLY
AND GROWTH IN VALUE ADDED
RATIO OF WITHDRAWALS TO MEDIAN
AVAILABLE SUPPLY. 1965
1
Excludes Arkansas-White-Red region.
ROW MEAN
Growth in
Value Added, 1959-68
BELOW
ABOVE
COLUMN
MEDIAN
MEDIAN
MEAN
Below Median
1
2
2
.871
.53
.20
Above
2.
4.
3.
Median
12
80
46
2.00
3.67
45
-------
TABLE 18
AVERAGE OF PERCENTAGE OF DISCHARGE TREATED, 1968,
FOR INDUSTRIAL WATER USE REGIONS CLASSIFIED
BY RATIO OF WITHDRAWALS TO MEDIAN WATER SUPPLY
AND GROWTH IN VALUE ADDED
RATIO OF WITHDRAWALS TO MEDIAN
AVAILABLE SUPPLY, 1965
Growth in
Value Added, 1959-68 Below Median Above Media_n
ROW MEAN
BELOW MEDIAN 34.5
ABOVE MEDIAN 31.5
COLUMN MEAN 33.0
33.2
35.0
34.1
33.9
33.2
TABLE 19
AVERAGE OF 1968 TREATED DISCHARGE AS A PERCENTAGE OF 1959
FOR INDUSTRIAL WATER USE REGIONS CLASSIFIED
BY RATIO OF WITHDRAWALS TO MEDIAN WATER SUPPLY
AND GROWTH IN VALUE ADDED
COLUMN MEAN
RATIO OF WITHDRAWALS TO MEDIAN
AVAILABLE SUPPLY, 1968
286.0
235.6
ROW MEAN
Growth in
Added, 1959-68
BELOW MEDIAN
ABOVE MEDIAN
Below Median
196.0
376.0
Above Median
215.7
255.6
205.8
315.8
TABLE 20
AVERAGE OF 1968 RATIO OF TREATED TO TOTAL DISCHARGE
AS A PERCENTAGE OF 1959 FOR INDUSTRIAL WATER USE REGIONS CLASSIFIED
BY RATIO OF WITHDRAWALS TO MEDIAN WATER SUPPLY
AND GROWTH IN VALUE ADDED
RATIO OF WITHDRAWALS TO MEDIAN
AVAILABLE SUPPLY, 1965
COLUMN MEAN
191.6
183.2
ROW MEAN
Growth in
Value Added, 1959-68
BELOW MEDIAN
ABOVE MEDIAN
Below Median
163.8
219.3
Above Median
189.7
176.8
176.8
198.0
46
-------
the growth in value added and the ratio of withdrawals to median
available supply. Other regional characteristics, such as regula-
tory activity, might explain variations in regional differences in
industrial wastewater treatment.
Economic behavior, then, leads to process changes which can be expected
to decrease industrial waste loadings. At first appearance it might
seem paradoxical that increased industrial production and increased
pressures on available supplies of fresh water, both of which are
pointed to as prime causes of environmental deterioration, also lead
to industrial process changes that have—at least relatiye—environ-
mental lly beneficial effects. The paradox is easily resolved by
viewing industrial intake and discharge of water as activities subject
to the same set of rational calculations that govern the use of any
productive input.
47
-------
Ill
INDUSTRIAL COST MODEL
Introduction
The chapter outlines the major assumptions and data sources for the
calculation of industrial waste treatment costs presented in subsequent
chapters.
Summation
Industrial waste treatment costs are dependent on flow volumes, residuals
characteristics, waste segregation opportunities, and available techno-
logy. Although these vary greatly from plant to plant, they can be
generalized for industrial categories, and evaluated on the basis of
reported flows and flow-to-cost relationships for specified engineering
constructs.
49
-------
INDUSTRIAL COST MODEL
Model Components and Logic
The data and interpretations that constitute the remaining chapters of
this report are based largely upon a modelled restructuring of Water Use
in Manufacturing. This portion of the Census of Manufactures, 1957
provides a data catalog on the water use characteristics of 9402 manufac-
turing establishments that reported an intake of 20 million gallons or
more of water in 1967, and responded to a detailed questionnaire on their
water utilization for the year 1968.
Model Characteristics
The characteristics of the evaluation model can best be appreciated
by a comparison of its aggregated structure with that of the estab-
lishments covered in Water Use in Manufacturing, 1967.
The basic distinction between the evaluation model and its Bureau of
Census source is the expansion of the model to include establishments
with an intake of 10 to 20 million gallons a year, where census data
include only users of 20 million gallons or more. The total number
of establishments covered is increased by this device by more than
50 percent (cf. Table 21). But in the case of food processing,
wood products, and leather, an approximate doubling occurs. These
industries tend to be broadly distributed and characterized by
moderately- sized plants rather than a few dominant factories
(food processing in particular which accounts for 25 percent of
the Census-reported sample and 42 percent of the entire expansion
in number of modelled factories) so that a truly significant portion
of their pollution-associated features are concealed if only larger
plants are considered.
A second distinction between the two data structures is critical to the
assessment of waste treatment requirements. The manner in which an
industry uses water is at least as important to a consideration of its
pollution characteristics as is the amount of water it uses; and the
distribution of pollution potential—as measured by calculated treat-
able discharge, which includes process water, sanitary sewage, and
cooling water recirculation to process applications—varies significantly
from the distribution of total discharge. Pulp and paper production,
third in gross water use, becomes the largest source of treatable
wastewater, due to the large amount of the industry's intake for
processing. Conversely, petroleum refining slips behind food processing
50
-------
TABLE 21
COMPARISON OF CENSUS
REPORTED ESTABLISHMENT AND
WATER DATA FOR
FACTORIES WITH INTAKES20,000,OOOG/YR.
WITH MODELLED FACTORIES
en
SIC
20
22
24
26
28
30
31
32
33
34
35
36
37
Percent of
Reported
Industry Intake
Food & Kindred Products 5.2
Textiles 0.9
Lumber & Wood Products 0.8
Paper & Allied Products 14.6
Chemrcal & Allied 29.0
Rubber & Plastics 0.9
Leather 0.1
Stone, Clay, Glass 1.6
Primary Metals 32.6
Fabricated Metals 0.4
Machinery 1.2
Electrical Equipment 0.8
Transportation Equipment 2.0
Manufacturing 100.0
Percent of
Calculated
Treatable
Discharqe
8.3
2.1
1.9
29.5
27.8
0.6
0.5
2.3
17.8
1.1
1.0
1.4
1.6
100
Establishments
Reported
2345
684
188
619
1125
301
92
586
841
569
471
562
392
9402
Modelled
4494
1021
405
862
1421
459
215
945
1137
1037
790
817
562
14,499
Difference
+91%
+49%
+116%
+39%
+21%
+52%
+134%
+61%
+35%
+82%
+68%
+45%
+44%
+54%
-------
as a source of treatable wastewater, not so much as a result of the
expansion of the food industry's evaluated discharge as because of
refineries' relatively heavy use of water for cooling rather than
processing. The leather industry—mainly its tanning component—stands
out as the one whose relative significance is most affected by the
modelling procedure. Heavy use of process water, combined with a
large relative number of units with an intake of 10 to 20 million gallons
a year, make the industry's share of waste treatment demand five
times as great as its reported share of total water demand.
The aggregate impact of these distributional features is not great.
Though more than half again as many factories are covered by the
evaluation model as by the report of the Bureau of Census, employment
in industries covered is only increased by 18 percent, and water use
by an even lesser percentage (cf. Table 22), However, the logic of the
recirculation device employed in the model, plus the broadening of
the population covered, provide a treatable discharge value that not
only exceeds reported process intake for plants using 20 million gallons
by a gross factor of almost 2.4 to 1, but also exceeds total reported
intake for the larger users alone in seven of the fourteen (two digit SIC)
industries. It is clear that while a relatively few factories account for the
bulk of manufacturers' use of water and for discharge of pollutants, water
use technology and size distribution of a number of industries for which
water is not so significant a resource tend to conceal a somewhat larger
pollution potential than might be thought.
The modelling procedure also affects the interregional distribution of
discharges, and so of costs. Not surprisingly, treatment costs for the
Colorado, Great Basin, and California regions experience a significant
increase in relative dimension when calculated treatable discharge is
compared to reported process intake. In those arid areas, resource
constraints act to hold an atypical proportion of manufacturers below
an intake of 20 million gallons a year, and also to promote recycling.
In two of the more humid and less industrialized regions—Southeast
and Pacific Northwest—a substantial increase in treatable discharge,
as opposed to reported total intake, traces to the presence of a larger
number of moderate-sized food processors and a lesser number of wood
products factories that would not be included in an evaluation limited
to plants with an intake of 20 million gallons or more. These five
regions—together with the Western Gulf, where the high degree of
recycling characteristic of the petroleum based industries inflates
calculated treatable discharge—all experience a significant expansion
of indicated waste treatment costs as a result of the procedures emoloved
(cf. Tables 22 and 23).
52
-------
01
CO
TABLE 22
FLOW & EMPLOYMENT COMPARISON
BY U. S. BUREAU OF CENSUS
WATER USE REGIONS
No. of Employees
Total Water Use (BGY)
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
Water Use Region
New England
Delaware-Hudson
Chesapeake
Eastern Great Lakes
Ohio
Cumberl and-Tennessee
Southeast
Western Great Lakes
Upper Mississippi
Lower Mississippi
Missouri
Arkansas-Red-White
Western Gulf
Colorado
Great Basin
California
Pacific Northwest
National Totals
Census
Reported'
525800
738500
385500
878700
1014000
1 74600
686000
862400
556100
95000
147300
168800
244500
40700
17800
41 9400
2091 00
7275600
Modelled
Establishments2
721838
937824
447107
947579
1284711
215130
889309
1010992
558473
124459
149789
1 90533
259663
.. 45602
16939
579946
21 0695
8590589
Process
Intake!
245
228
164
413
424
117
548
674
200
116
67
104
420
12
18
115
353
4295
Total
Intake1
585
1259
816
1626
2455
558
1181
1924
695
780
162
237
2031
23
35
370
599
15467
Total
DSGE1
558
1192
755
1460
2295
536
1100
1811
582
745
142
185
1899
18
27
314
533
14276
Synthesized
Process „
Discharge^
459
478
312
709
912
209
1654
1043
359
388
146
185
2059
35
35
375
876
10231
Reported by U. S. Bureau of Census for Establishments with an intake ^20 million gallons in 1968.
p
Developed by E.P.A. for establishments with an intake >_ 10 million gallons in 1968.
-------
TABLE 23
FLOW & EMPLOYMENT
COMPARISONS
BY INDUSTRY
No. of Employees (1000's)
Total Mater Use (BGY)
SIC
20
22
24
26
28
29
30
31
32
33
34
35
36
37
Census 1
Industry Reported1
Food & Kindred Products
Textiles
Lumber & Wood Products
Paper & Allied Products
Chemical & Allied Products
Petroleum & Coal
Rubber & Plastics
Leather
Stone, Clay, Glass
Primary Metals
Fabricated Metals
Machinery
Electrical Equipment
Transportation Equipment
633.3
413.5
63.4
267.6
526.8
106.3
214.2
32.0
224.8
894.5
357.2
673.2
978.9
1304.0
7275.6
Modelled ?
Establishments
924
548
149
348
781
127
304
102
325
1025
586
995
1254
1080
8590
.0
.5
.4
.5
.9
.3
.3
.3
.7
.7
.0
.3
.1
.5
.6
Process
Intake1
290
109
36
1477
733
94
23
13
89
1027
37
28
46
63
4295
.6
.0
.5
.9
.4
.6
.8
.9
.1
.2
.1
.9
.6
.3
.1
Total
Intake1
810
154
117
2252
4476
1435
134
15
251
5004
67
189
126
312
15,466
.9
.2
.9
.0
.2
.1
.9
.8
.1
.7
.7
.0
.6
.8
.5
Total
DSGE1
752
136
92
2077
4175
1217
128
14
218
4695
65
180
118
293
14,275
.8
.0
.7
.6
.1
.0
.4
.9
.4
.5
.0
.8
.4
.1
.9
Synthesized
Processes
Discharge^
852.0
216.6
193.9
3014.7
2844.3
430.3
61.5
51.1
239.9
1821.5
110.1
99.2
139.4
159.5
10.231.1
1
Reported by U. S. Bureau of Census for Establishments with an intake ^20 million gallons in 1968.
'Developed by E. P. A. for establishments with an intake ^10 million gallons in 1968.
-------
Waste Treatment Processes Evaluated
Treatment of the liquid wastes of manufacturing processes is so different
in application from sewage treatment that it is verv nearly a separate
concept. Sewage treatment occurs at the nodal point of a complex of
collection and transmission works. Central processing of a relatively
homogenous materials input through a sequence of similarly scaled steps
is the essence of the method.
Industrial waste treatment, on the other hand, tends to be practiced in
terms of the residuals characteristics of separate manufacturing pro-
cesses. Segregation, rather than collection, of waste streams becomes
a prime method of increasing treatment effectiveness and controlling
treatment costs. Each waste stream tends to receive only that treatment
that is appropriate to its volume and constituents. Uncontaminated waste
waters—the prime example is cooling water that does not come into contact
with other materials--are segregated and discharged directly or recycled.
Complementary waste streams sometimes provide effective treatment without
the intervention of any process other than natural mixing—the combination
of an acid with an alkaline waste stream, for example, will often provide
an appropriate remedial reaction. Even where conventional primary and
secondary waste treatment are practiced, it is common that dilute waste
streams enter the secondary (biological) stage directly in order to reduce
capacity required for sedimentation.
The nature of the procedure has many implications for both industrial
water use and for analysis of the costs of industrial waste treatment.
(l)Given the significance of segregation of waste streams, there is no
configuration of treatment modes that can be assigned as ideal for any
group of industrial plants. To some degree, each factory becomes a sepa-
rate and distinct unit of account, with not only the nature of its pro-
cesses, but even their physical configuration within the plant dictating
the most efficient sequence of liquid waste treatment measures. (2)Be-
cause waste streams may be segregated and treated according to waste
characteristics, some processes become integral parts of the manufacturing
operation rather than waste treatment per se. In effect, the interjection
of the treatment process obviates the need for pumping and treatment of
fresh intake water and promotes water recycling. (3)Faced with the added
cost of waste treatment, management has an incentive to use water more
sparingly in other ways than recycling, and may, in fact, abandon some
hydraulic processes altogether.
Any consideration of industrial waste treatment, then, must start
from the view that it is an integral part of the production process, and
must be approached in terms of the general issue of water productivity.
From the practical standpoint of analysis, improvements in the product
ivity of water tend to be distributed through the nation's capital
stock in a fashion that is highly influenced by age and location of
plants. Because it is such a basic feature of a factory, water engi-
neering does not tend to change, once that factory has been built and
is operating. There is, then, good reason to believe that historical
55
-------
trends in reduction of water inputs per unit of product output largely
reflect the time stream of plant construction. The same firm can
include plants that utilize the water technology of 1871 and 1971—and
often the two plants produce the same product and may even be located
in the same factory complex.
Quite clearly, the variety of production conditions precludes the
development of any precise projection of waste treatment costs for
manufacturing, and the wide range of waste treatment possibilities open
to industrial management only makes the matter more difficult. It should
be recognized, however, that the cost of waste treatment is usually not
significant enough in itself to justify major plant redesign, so the
capitalization of industrial waste treatment will probably continue for
some years to reflect a sub-optimal allocation of resources that derives
from the existence of many factories that date from a time before water
utilization practices and waste treatment constraints exercised any
influence on production costs.
In the absence of reliable decision rules to apply to the complex
trade-offs and variations in efficiency that will condition the final
cost for any given time period, the model employs the knowledge we
possess about the amount of manufacturers' wastes discharges and the
characteristics of the water-borne residuals of various manufacturing
processes. Using this information, the model attempts to determine
with some accuracy the upper limits of such costs and modifications
likely to occur as a direct result of the imposition of those costs.
The method of calculation was dependant on the treatment of all process
waste streams for each pollutant identified with the process by the
most effective (as opposed to most efficient) conventional treatment
method now available. And wherever options might be discerned, the
higher (or highest) cost solution to the problem was assumed. Consonant
with a procedural requirement that all wastes be treated to the highest
degree possible with conventional technology, it was assumed that all
waste constituents, except dissolved mineral solids, would be removed,
reduced, or emended. In effect, it was assumed that floating and settle-
able materials be removed—with chemical assistance in many cases,
that dissolved organics be stabilized, that caustics and acids be neutra-
lized, that potential pathogens be subject to disinfection, that uneven
waste streams be equalized, and even—in some particularly difficult
situations—that concentrated waste streams be evaporated or incinerated.
Industrial categories reported in Mater Use in Manufacturing, 1967 were
regrouped into subgroups according to the k.inds and concentrations of
waste products that were considered to be characteristic of various
industrial processes based on an extensive literature. The 320 four digit
SIC groupings reported by the Bureau of Census emerged, when reassembled,
as 71 components, with a generalized waste treatment configuration
established for each (cf. Table 24). The decision rules applied in
determining the configuration were:
a. Standardized treatment procedures were to be applied in
56
-------
every case, and where modifications peculiar to a plant or any industry
were reported in the technical literature, the modification was rendered
in terms of a similar standard solution to the engineering problem.
b. No treatment method, or sequence of treatment methods,
drawn from the technical literature was to be applied unless it was
associated with a reduction of 90 percent or more of the pollutional
aspects of wastewater that it was intended to remedy.
c. All treatment sequences and other system components were
to embody the highest cost standard methods; and when there was uncer-
tainty as to what portion of the waste stream was to undergo a given
treatment procedure, then the larger possible component—up to the total
waste stream—was to be assigned that procedure.
57
-------
TABLE 34
BASIC ELEMENTS OF THE INDUSTRIAL HASTE TREATMENT I100EL
CODE
201
202
203
2041-5
2046
205
2061-2
2063
207
208
209
20XX
2211
2221
2231
226
22XX
24
261
2621
2631
264
265
266
26XX
2812
2813
2815
2816
2818
2819
282
283
284
2851
2851
287
289
28XX
2911
29XX
30
3111
31 XX
INDUSTRIAL CLASSIFICATION
NIWER OF
ESTABLISHMENTS
PERCENT Of PROCESS UASTEWATER REQUIRING TREATMENT
NAME 10-19 MGY^ 20 HGY :1: :2: :3: :4: :5: :6: :7: :8l :9:
MEAT PRODUCTS
DAIRY PRODUCTS
CANNED, FROZEN PRESERVED FOODS
FLOUR AND OTHER GRAIN MILL PRODUCTS
WET CORN MILLING
BAKERY PRODUCTS
CANE SUGAR
BEET SUGAR
CONFECTIONARY AND RELATED PRODUCTS
BEVERAGES
MISCELLANEOUS FOODS AND KINDRED PRODUCTS
OTHER FOOD PROCESSING
WEAVING MILLS, COTTON
WEAVING MILLS, SYNTHETIC
WEAVING AND FINISHING MILLS, WOOL
TEXTILE FINISHING, EXCEPT WOOL
OTHER TEXTILES
LUMBER AND WOOD PRODUCTS
PULP MILLS
PAPER HILLS, EXCEPT BUILDING PAPER
PAPEP.BOARD MILLS
MISCELLANEOUS CONNECTED PAPER PRODUCTS
PAPERBOARD CONTAINERS AND BOXES
BUILDING PAPERS
MISCELLANEOUS PAPER PRODUCTS
ALKALIES AND CHLORINE
INDUSTRIAL GASES
CYCLIC CRUDES AND INTERMEDIATES
INORGANIC PIGMENTS
INDUSTRIAL ORGANIC CHEMICALS
INDUSTRIAL INORGANIC CHEMICALS
FIBRES, PLASTICS RESINS
PHARMACEUTICALS
TOILETRIES AND DETERGENTS
PAINTS
WOOD CHEMICALS
AGRICULTURAL CHEMICALS
MISCELLANEOUS CHEMICAL PRODUCTS
MISCELLANEOUS CHEMICALS
PETROLEUM REFINING
PETROLEUM AND COAL— OTHER THAN REFINING
RUBBER AND PLASTICS
LEATHER TANNING AND FINISHING
LEATHER
189
456
174
60
4
153
6
153
239
220
51
29
18
25
176
175
1
6
14
59
94
5
1
36
7
4
20
39
31
22
41
28
4
28
32
25
35
142
22
77
541
729
518
78
17
208
67
60
208
412
380
148
76
82
139
261
231
36
269
185
100
48
47
31
82
64
27
147
198
177
75
64
53
19
85
116
206
69
317
88
28
250.
250.
200.
250.
200.
250.
150.
150.
250.
300.
200.
250.
250.
250.
250.
250.
250.
250.
350.
350.
350.
350.
250.
350.
350
350.
350.
350.
250.
350.
350.
350.
250.
250.
250.
350.
350.
300.
300.
350.
300.
350.
250.
250.
2.00
1.00
2.00
1.00
3.00
1.00
3.00
3.00
1.00
2.00
1.00
1.00
2.00
2.00
3.00
1.00
1.00
2.00
4.00
2.00
2.00
1.00
1,00
2. DO
2,00
1.00
1.00
3.00
1.00
3.00
1.00
4.00
2.00
1.00
1.00
2.00
1.00
1.00
1.00
2.00
1.00
1.00
4.00
1.00
1.2
1.2
1.2
1.2
1.3
1.2
1.35
1.35
1.2
1.35
1.3
1.25
1.2
1.3
1.2
1.2
1.2
1.2
1.35
1.35
1.35
1,35
1.2
1.3
1.3
1.35
1.35
1.35
1.35
1.35
1.35
1.35
1.2
1.25
1.25
1,35
1.35
1.3
1.3
1.35
1.3
1.3
1.2
1.2
33
50
100
50
100
100
50
25
35
50
13
20
20
20 25
20
20 25
20
50
20
20
25
10 20
10 20
100 20
40 20
50
100
50
100
100
50
25
20
44
35
20
11 19
50
52
40
40
60
45
100 60
100 60
20 33
100 60
20 33
100 60
15 50
80
33
100 60
20 33
20 30
60 45
60 45
40 20
40 20
15 50
100 100
80
100
100
100
100
200
200
100
100
100
90
100
100
100
64
75
43
100
100
100
100
100
90
67
67
100
65
100
67
77
23
23
60
100
100
:ir>: till :12: :13: :14: :15:
166 33
100
140
100
100
100
100
100
100
125
100
90
100
66
100
100
91
100
86
100
100
100.
100
100
100
100
100
185 60
33
100
70
50
50
130
100
100
100
100
Explanation of Numbered Columns
:1: Operating Year (Days)
:2: High Waste Concentration Factor
:3: Installation Multiple Factor
Columns 4 thru is—Treatment Processes
:4: D11 Separation
:5: Equalization
:6: Coagulation and Sedimentation
:7: Neutralization
:8: Flotation
:9: Sedimentation
:10: Aeration
:11: Biological Stabilization
:12: Chlorlnatlon
:13: Evaporation
:14: Incineration
:15: Activated Sludge
58
-------
TABLE 24—continued
BASIC ELEMENTS OF THE INDUSTRIAL WASTE TREATMENT MODEL
CODE
3211-
322-3
3241
325-326
327
3281
329
32XX
3312
331 X
3321
332X
3331
3332-3
3334
33XX
34
35
36
37
39
INDUSTRIAL CLASSIFICATION
NAME
GLASS
CEMENT
CLAY
CONCRETE AND PLASTER
STONE
NON-METALLIC MINERALS
MISCELLANEOUS— STONE, CLAY, GLASS
BLAST FURNACES AND STEEL MILLS
STEEL ROLLING AND FINISHING
GRAY IRON FOUNDRIES
IRON AND STEEL FOUNDRIES
PRIMARY COPPER
PRIMARY LEAD AND ZINC
PRIMARY ALUMINUM
OTHER PRIMARY METALS
FABRICATED METALS
MACHINERY
ELECTRIC MACHINERY
TRANSPORTATION EQUIPMENT
MISCELLANEOUS MANUFACTURING*
NUMBER OF
ESTABLISHMENTS
10-19 MGY> 20 MSY
36
10
73
102
10
49
13
35
41
13
1
1
149
404
281
255
115
99
148
140
51
179
28
121 '
189
107
76
189
26
22
21
254
633
510
562
447
117
PERCENT
:l: :2: :3: -A: :S: :S:
350.
350.
300.
300.
250
250
250
350
350
300
300
350
350
350
300
250
250
250
250
250
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1
1
1
1
1
.2
.2
.2
.25
.25
1.2
1
1
1
1
1
1
1
1
1
1
1
1
1
1
.2
.35 75
.3 75
.2
.2
.3
.3
.3
.3
.25
.25
.25
.25
.25
100
100
100
100
100
100
100
75 100
50 100
50
50
100 100
100
60
45 70
56 93
56 93
56 93
56 93
25 40
OF PROCESS WASTEWATER REQUIRING TREATMENT
:7: :8: :9: :10: ill: :12: :13: :14: :15:
100 50
100
100
100
100
100
100
75 35
75
50 100
50 100
100
100
60 40
75 30
110 22
110 22
no 22
110 22
55 47 12 62 5
Explanation of Numbered Columns
:1: Operating Year (Days)
:2: High Waste Concentration Factor
:3: Installation Multiple Factor
Columns 4 thru 15—Treatment Processes
•A: 011 Separation
:5: Equalization
:6: Coagulation and Sedimentation
:7: Neutralization
:8: Flotation
:9: Sedimentation
:10: Aeration
:11: Biological Stabilization
:12: Chlorlnatlon
:13: Evaporation
:14: Incineration
:15: Activated Sludge
'Arithmetic mean for all listed Industries.
-------
IV
COST OF INDUSTRIAL WASTE TREATMENT
Introduction
The chapter presents the range of capitalization levels and annual
costs that have been calculated to coincide with levels of industrial
effluent treatment dictated by current interpretations of water
quality standards.
Summation
1 •.
Through manufacturers' investments to provide waste treatment consistent
with current effluent standards may be as high as $12.2 billion
(August 1971 = 100), the most likely level of capitalization is roughly
$8.3 billion. Annual costs—operation, maintenance, debt service,
and replacement—associated with those levels of capitalization are
$2.4 billion and $1.6 billion, respectively. Depending on policy
flexibility and management skill, the costs are highly controllable,
so there are many opportunities to reduce the burden of pollution
abatement, both for the firm and for society at large. However, costs
are very unevenly distributed, and obsolete factories will bear a share
of the total that is disproportionate to either their output or
employment. Cost minimizing strategies, then, are likely to produce
localized hardship.
61
-------
COST OF INDUSTRIAL WASTE TREATMENT
Maximum Capital Requirements
Capital facilities having a maximum replacement value of $12.2 billion
would be required to provide American manufacturers with the level of
waste treatment consistent with current interpretations of State and
federal water quality standards. Availability and utilization of that
capital would result in maximum annual costs of $2.4 billion (cf.
Table 25).
1
^Dollar values are reported in the text of this study in August 1971
dollars. Tabular data, however, are in all cases presented in the terms
in which they were calculated, that is, purchasing power at August 1967
for materials, labor, and equipment in the approximate mix in which they
occur in waste treatment plant construction and operation. It should«
be noted that inflation in the costs of waste treatment plant construc-
tion—probably due in large measure to the enormous increase in activity
since 1966—has exceeded that in most economic sectors in recent years.
During the nineteen-fifties and early nineteen-sixties, waste treatment
plant and sewer construction costs rose at an average rate that was less
than that of prices generally, and well below that of all construction.
Since 1967, such costs—as measured by Sewage Treatment Plant Construction
Cost Index—have increased at a materially faster rate than prices gener-
ally. And in 1971, when the relative rate of inflation for most items
dropped below the experience of 1969 and 1970, the increase accelerated
for sewage treatment plant construction.
RELATIVE INFLATION,
MEASURED BY SELECTED PRICE INDICES
STP, Construction
GNP Deflator
Consumer Prices
Year
Cost
1
Structures^
Total3 All Food
Items
Services
1967
1968
1969
1970
1971
^967
21967
31967
= 119
= 124
= 117
100
103
in
120
135
.4
.0
.6
.0
.5
.1
.3
.7
100.
105.
113.
122.
137.
0
1
8
7
4
100.0
104.0
108.9
114.7
120.4
100.0
104.2
109.8
116.1
121.3
100.
103.
108.
114.
118.
0
6
9
9
4
100.0
105.2
112.5
121.3
128.4
62
-------
TABLE 25
MAXIMUM INDUSTRIAL WASTE
TREATMENT REQUIREMENTS
1968 CONDITIONS
Millions of 1967 Dollars
SIC
20
22
24
26
28
29
30
31
32
33
34
35
36
37
Industry
Food & Kindred Products
201 Meat Products
203 Canned & Frozen Foods
206 Sugar Refining
208 Beverages
Textiles
Lumber & Wood Products
Paper & Allied Products
261 Woodpulp
262 Paper
263 Paperboard
Chemical & Allied Products
281 Industrial Chemicals
282 Fibers, Plastics,
Resins
Petroleum & Coal
291 Petroleum Refining
Rubber & Plastic
Leather
Stone, Clay, Glass
Primary Metals
331 Basic Steel Products
333 Primary Non-Ferrous
Metals
Fabricated Metal Products
Machinery
Electrical Equipment
Transportation Equipment
Manufacturing
Capital
Required
$997.5
116.1
227.9
294.2
112.1
251.4
186.1
1550.5
653.8
711.5
321.5
1550.5
1252.4
144.1
1096.1
1083.6
96.0
86.8
182.3
1620.5
981.8
204.6
1124.14
100.1
129.46
122.71
8965.7
Annual Cost
Replacement^
49.9
5.8
11.4
14.7
5.6
12.6
9.3
77.3
32.7
35.6
16.1
121.8
62.6
7.2
54.8
54.2
4.8
4.3
9.1
81.0
49.1
10.2
6.2
5.0
6.5
6.2
448.3
Interest
76.8
8.9
17.5
22.7
8.6
19.4
14.3
119.4
50.3
54.8
24.8
187.6
96.4
11.1
84.4
83.4
7.4
6.7
14.0
124.8
75.6
15.8
9.6
7.7
10.0
9.4
690.4
Operation
57.6
8.5
10.3
19.9
5.0
11.4
10.1
112.3
34.3
42.6
21.7
123.9
93.6
8.1
48.4
47.3
6.1
4.3
21.3
147.3
110.6
12.9
12.6
10.7
14.1
15.9
600.3
^20 year average life.
^7.7% average rate, Moody's Industrials, January-August, 1971
63
-------
The amounts—which are based on the 1968 distribution and utilization of
productive capital--are gross figures. They include the replacement value
of waste treatment facilities already in place, waste treatment services
provided by public agencies, and no allowances for relative efficiencies or
in-plant modifications that may provide equivalent effects for less cost.
Capital requirements are distributed through the various manufacturing
sectors in a manner that strongly reflects their water use characteristics
and has loose direct correlation with output values. Chemicals manufac-
ture, primary metals production, pulp and paper production, petroleum
refining, and food processing account, respectively, for 27 percent,
18 percent, 17 percent, 12 percent and 11 percent of the indicated
investment, and 29 percent, 32 percent, 15 percent, 9 percent, and
5 percent of reported water intake. Eighty-five percent of the
capital requirement associated with water pollution abatement, then,
comes from five manufacturing sectors that, in the aggregate, provide
little more than a third of values added by manufactures.
The association of capital requirements with water use practices has
enormous implications for the dimensions of ultimate costs. Higher
treatment costs, other things being equal, are a direct consequence of
wasteful use of water. And water is wasted largely because it has had
many of the characteristics of a free good. Imposition of a wastewater
treatment requirement—or other cost-incurring constraint on water utili-
zation—will, it has been demonstrated both in theory and in practice,
lead to production practices that are less water-intensive, and thus have
lower associated waste treatment values.
In the eventual resolution of the industrial waste-handling situation, it
is almost inconceivable that the maximum investments summarized in
Table 25 will occur under existing abatement requirements. A significant
segment of the total value calculated must be attributed to the
fact that a good portion of the investment represented has not been
made. When it is made, the process of investment may be expected
to lead to a pattern of water utilization that eliminates a significant
portion of the cost.
Variation of Capital Requirements
Several modifications of the evaluation model were attempted in order to
arrive at a more realistic assessment of capital requirements, one that
took into account the modification of water utilization practices that
accompanies installation of waste treatment as well as hardware and con-
struction costs. Without altering the relationships among treatment
process components, water use coefficients were substituted for the
observed ones—though all substitutions were made by recourse to observed
conditions—and investment and annual cost calculations were produced
to reflect the altered variables. Table 26 presents distribution of
64
-------
TABLE 26
VARIATION IN CAPITAL REQUIREMENTS
UNDER ALTERNATIVE WATER UTILIZATION REGIMENS,
1968 CONDITIONS
Level of Industry Efficiency
Capital Requirements
Billions of
1967 dollars
Billions of
1967 dollars
Actual 1968 distribution $8.97
Least efficient (17th) regional component
given characteristics of directly
superior (16th) 7.57
All efficiencies less than median given
characteristics of median component 5.96
All efficiencies less than most efficient
third (6th) given characteristics of sixth
component 4.84
Most efficient component's characteristics
used in all cases 3.12
$12.17
10.27
8.09
6.57
4.23
65
-------
capital requirements in terms of alternative water use regimens. The
most likely investment level is thought to be the one associated with
median efficiency—certainly somewhere in the range between "most
efficient third" and modification of "the least efficient region".
*
The levels of capitalization thought to define probable requirements
were reached by calculating costs for each of 71 industrial subgroups
on the basis of water use characteristics of the industry at unit^water
utilization rates no greater than those characteristic of the median
region among the census defined "Industrial Water Use Regions", the
sixth in relative efficiency among the seventeen regions, and the
sixteenth in relative efficiency. That is, water use rates were utilized
precisely as observed for nine regional/industrial components in the
one case;in the other cases for six and sixteen regional segments of
each industry, with the characteristics of the ninth, the
sixth and the sixteenth substituted for those regions in which they
are exceeded in reported practice.
The likelihood of achieving such enormous efficiencies—in aggregate
terms they amount to $2 to $5 billion worth of waste treatment capital
at little or no cost—is not as remote as it might appear on the surface.
The substitute variables imposed upon the matrix are not expressed as
levels of firm or factory efficiency, but as expressions of existing
regional distributions that include all of the parameters—age of plant,
processing technique, size of plant, raw material quality, water availa-
bility—that affect unit water use in large subsets of a total industry.
Further, the range of conditions that is thought to include the most
probable set of investments is not extended to less efficient industrial
subsets on the basis of the values at the ends of the chosen regional
groupings. Costs imposed on the less hydraulically efficient industry/
region subsets did not come from a compression of the distributions for
the more efficient regions, so do not reflect the more demanding use
regimens of arid regions. The manufacturing technologies that are
implied, then, lie not only well within the bounds of existing practice,
but also within the bounds of practice for areas where there are no signi-
ficant resource constraints.
In short, the imposed conditions do not represent any theoretical or
arbitrary modifications of existing practice, but the extension of prac-
tices that are currently employed in substantial segments of each industry.
It is not an attempt to discern what would happen if industry made a maxi-
mum adjustment of its use of water to accommodate waste treatment, but an
attempt to measure what does happen when waste treatment or other cost-
imposing constraints on water use occur.
At the risk of redundancy, it should be stressed that the full range of
values presented in Table 26 refers to current practice and to an equal
degree of waste treatment effectiveness. The values simply provide quan-
titative expression to the often repeated truism that industry has a
number of internal options in dealing with its waste handling problem.
66
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Policy Implications of Cost Variability
The breadth of the range of values contains some significant policy
implications. These should be taken into account in any resolution
of the waste handling problem:
1. Alternative approaches to waste reduction requirements can
produce similar efficiencies within a wide range of costs. Measures that
stress one approach or another to industrial water pollution abatement will
inevitably be unsuited to some industry segments, thus will tend to in-
crease costs unnecessarily. Flexibility in approach to the issue should
reduce the burden of water pollution abatement on the economy, freeing
resources for other uses.
2. Given the significance of flexibility, and accepting the general
rule (that underlies all domestic policy on the issue) that management
will not act to reduce its discharge of pollutants in the absence of
external pressures, it would appear that very direct incentives that
embody water quality goals without specifying the means to reach them
should provide an approach to a least-cost solution of the waste treat-
ment question. Suitably scaled taxes on amount of waste discharge
constituents or limits on allowable pollutant concentrations in the
effluent should, for example, prove superior to regulatory specification
of treatment procedures.
3. Because the various unit water use values are calculated at the
mean for each regional segment of an industry, and because the very waste-
ful users of water in any industry/region component strongly influence
the mean, it is obvious that a relatively few factories—the most ineffi-
cient plants in the least efficient regions—account for a very
considerable portion of the total cost of water pollution control. A few
hundred factories create the almost $2 billion capital gap between the
least efficient and next-to-least efficient users. It may be assumed
that those plants—mainly engaged in the production of pulp and paper
and organic chemicals--are in many cases obsolescent in other respects
than their water engineering. That concentration of avoidable costs
in a few establishments suggests that factory replacement may in more
than a few instances be the most rational solution to waste treatment
requirements. The fact that waste treatment does not represent a
significant capital burden in the aggregate should not be allowed to
obscure the subordinate fact that a number of plants may be scheduled for
closure and replacement as a consequence of the very uneven distribution
of such costs.
Annual Cost Components
The matter of initial capitalization of waste treatment works tends to be
over-stressed. Granted that installing up to $12 billion worth of facili-
ties represents a significant pressure on management's financial sources
67
-------
and overall capital planning, the first cost of facilities represents
less than a fourth of the total cost of industrial waste treatment. Once
installed, facilities must be operated and maintained. Given the compo-
sition of the set of treatment requirements evaluated here, operation and
maintenance accounts for 35 percent of the ultimate total cost. (In the
less capital-intensive approach to waste treatment that industry prefers
in actual practice, operation and maintenance charges currently amount
to 55 percent of annual costs.) Interest, at current rates, accounts
for a large, if"not the largest, share of annual charges for waste treat-
ment. Some 40 percent of the annual costs of the modelled treatment
system, and 27 percent of the annual costs of the system of works that
industry reported to be in operation in 1968, can be attributed to interest
payments implicit in the value of the capital stock. And to make the
sequence of major and minor replacement expenditures required to sustain
the stock of physical capital, the firm faces a continuing capital demand,
one that is estimated to equal the initial cost within a 20 year
period, and to accdunt for 25 percent of the annual costs of the modelled
system of waste treatment works.
Annual Capital Charges
To restrict our view of the costs of industrial waste treatment to
the price of installing the devices is to overlook between three-quarters
and four-fifths of the total cost and ultimate impact on prices.
That evaluation, it should be noted, is an even more conservative state-
ment of conditions than most industrial spokesmen would accept. Where
this report assesses replacement requirements in terms of the 20
year average life that engineers design into facilities, and assesses
int'erest charges at the current rate for industrial bonds, industrial
management tends to view investments in terms of capital recovery fac-
tors. These vary from industry to industry, and are influenced by the
tax laws, but in few cases is it likely that industry sources would
accept the moderate rates of capitalization utilized here as being
consistent with their financial management practices.
Recognizing that difference in concept, this study attempts to focus on
the practical realities of cost rather than the accounting and financial
management conventions that interpret reality within a framework of time
preferences, tax liability, and public relations pressures. The emphasis
here is on likely amount of annual cash flow and not the vagaries of
reported profits or anticipated rates of return.
Expenditures for replacement are based on engineering estimates of the
mean expected useful life of facilities. The concept evaluated assumes
that five percent of the value of the total capital stock of waste treat-
ment works in any industry will, on average, be replaced each year. The
assessment is one of maintenance of the physical stock of capital and
consequent cash outlays, not on depreciation as that term is used for
68
-------
tax and other reporting purposes. And while any given rate of replace-
ment may infer an unrealistic evenness to the pattern of expectable
outlays, the ultimate occurrence of such costs is undeniable.
While there is almost no evidence available upon which to gauge the rate
at which replacement of industrial waste treatment works actually takes
place, the five percent figure assigned is considered to be reasonable,
in that it takes into account the rated operating life of components
and the demonstrated industrial preference for short-term application
of capital. (Short-term, that is, as compared to public works.) The
assumption that assigns the replacement function at a rate that is 25
percent more rapid than that for municipal waste treatment plants is
not, then, based on allowable depreciation accounting, but on antici-
pations that take into account the nature of components, industrial
behavior, and the greater quantity and more corrosive nature of typical
industrial wastes per gallon of water.
The interest rate that is assigned includes no selectivity or judgement.
the Established market rate for industrial instruments is accepted as
the appropriate indicator of the cost of capital at any point in time.
Thus, the average monthly yield in the most recent twelve month period,
(i.e. 7.7 percent July, 1970 to August, 1971) as reported by a standard
financial service (Moodys) for industrial bonds, has been applied con-
sistently to evaluate interest charges.
Operating and Maintenance Costs
Operating and maintenance charges are a function of capital configura-
tions. As assessed in the model, they deviate sharply from estimates
of existing operating costs as a percentage of capital values (cf.
Table 27).
Such significant differences cannot be attributed to a difference in
method. American industry does not report its operating outlays for
waste treatment, so both the value and operating costs had to be
calculated in essentially the same manner as were targeted goals. Both
values were synthesized from the same sets of coefficients. In the
case of existing capital, normal cost to size relationships were applied
to the various kinds of reported facilities on the basis of the.mean
capacity for each industry. A number of explanations for the variation
in operating cost ratios are available, and these have potential bearing
on policy formulation.
1. Current operating ratios may reflect the fact that industrial
wastes, in the aggregate, are under-treated. As the degree of waste
treatment increases, the process becomes increasingly capital-intensive.
Normal economies of scale find expression as the waste treatment process
is intensified, but they are less pronounced--at least in terms of the
progression pre-treatment, primary treatment, secondary treatment—with
respect to capital than for- labor costs, which account for roughly half
69
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TABLE 27
ANNUAL OPERATING AND MAINTENANCE COSTS
AS A FUNCTION OF CAPITALIZATION
Estimated Operating Cost Ratio, 1968
Modelled
SIC Industry Modelled Requirements Available Capital
20
22
24
26
28
29
30
31
32
33
34
35
36
37
Food & Kindred
Texti 1 es
Lumber & Wood Products
Paper & Allied Products
Chemicals & Allied Products
Petroleum & Coal
Rubber & Plastics
Leather
Stone, Clay, Glass
Primary Metals
Fabricated Metal Products
Machinery
Electrical Equipment
Transportation Equipment
Misc. & Unidentified
Mean, All Manufacturing
.058
.045
.077
.057
.079
.060
.056
.050
.116
.092
.091
.096
.098
.12
.073
.076
.078
.155
.122
.184
.214
.100
.100
.075
.162
.060
.054
.063
.063
.050
.147
70
-------
of normal operating costs. Thus all costs rise as degree of treatment
increases, but capital costs rise more sharply than operating charges.
2. Capital saving expedients that reduce total costs but increase
unit costs by forfeiting economies of scale are probably available in
far greater measure than the modelled evaluation indicates. More strin-
gent waste segregation and process water recycling (as opposed to the
cooling to process cycles assumed in the model) would permit much smaller
waste treatment plants, thus lower capital costs, without a comparable
reduction in operating costs.
3. Industry is known to favor waste treatment solutions that mini-
mize capital requirements. There are a number of treatment configurations,
and treatment-process combinations, that provide equivalent waste control
in any given situation. In approaching a possible trade-off between
capital and operationally intensive alternatives, management has every
reason to favor the one that promises capital savings up to--and per-
haps even beyond--the point of equal total cost:
a. Capital savings may be applied to other purposes; operating
economies must be accumulated over time to provide the same utility.
Available savings, then, are inherently more valuable than potential
ones, with the amount of the premium generally considered to be expressed
by the prevailing interest rate (though the return on invested capital
anticipated by any firm establishes its particular level of preference).
Over the last three to four years--when a significant portion of total
manufacturers' investment for waste treatment has taken place—interest
rates have held at levels not generally seen in the U.S. since the
eighteenth century. Given the consequent penalty on capitalization and
expectations for more characteristic interest charges in the future,
management has a strong incentive to seek out treatment solutions with
low capital requirements--even at the expense of otherwise avoidable
operational penalties.
b. The composition of outputs shifts rapidly, and the nature
of processes somewhat less rapidly, in a number of industries. Least-
cost solutions that are tied too intimately to a particular product
or process carry with them a high degree of risk. Management may,
in such circumstances, find it preferable to accept operational cost
disadvantages in order to insure flexibility. Land intensive and
operationally demanding treatment configurations in many cases serve
as insurance against sunk capital losses. (The phenomenon is probably
most evident in segments of the chemicals industries, where batch
processing persists in order to reduce the impact of process change
on risk factors, leading management to resist capital intensive con-
tinuous flow production processes of inherently greater efficiency.)
If the waste treatment system is viewed as an extension of the total
production process, it is not surprising that the same risk-avoidance
mechanisms should produce the same augmenting effects on operating
costs.
71
-------
c. Taxes on business are framed to make it more advantageous
to accept incremental operating costs, all other things being equal.
Materials and labor utilized in operations may be used as an offset in
the year of the expenditure, while capital must be charged off over time.
There is, then, a wide possible variation in the composition of annual
costs. Not only hydraulic efficiency, but trade-offs between capital and
operational elements, between equipment and land within the capital
costs, and between the capital and operating component of waste treatment
practice will affect the resolution of costs.
One may make the simplifying assumption that trade-offs all take place
virtually at the point of intersection of marginal cost curves for
capital and other factors. If the assumption approximates reality,
then costs derived from the evaluation model may be trusted. Unfortu-
nately, there are no data with which to test the assumption. On the
other hand, it should be kept in mind that the logic of the model is
based upon determining the highest possible costs that are consistent
with current waste treatment standards. It is reasonable, then, to
assume that annual costs, at any given level of efficiency, will be
no greater than those presented here, regardless of the relative weight
of operations, replacement, and interest charges. (In the public sec-
tor, the bias to capital-intensive solutions created by existing cost-
sharing procedures results in unnecessarily high annual costs. Subsidy
and other market-limiting arrangements could produce a similar effect
in the case of industrial waste treatment. At the present time, however,
the cost-ceiling thesis seems generally accurate.)
The product of the evaluation procedure, as reported in Table 28,
is the determination that complete adherence by manufacturers to
the waste treatment requirements of existing water quality standards
would have amounted to something between $1.2 and $1.7 billion of value
added by manufactures in 1968, or between $1.6 and $2.4 billion in 1971
prices. (Vajues added by manufactures in 1968 amounted to $260 billion-
including tHe value of waste treatment.provided in that year.)
72
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TABLE
ANNUAL COSTS OF WASTE TREATMENT
28
UNDER 1968 PRODUCTION CONDITIONS
MILLIONS OF 1967 DOLLARS
SIC
20
22
24
26
28
29
30
31
32
33
34
35
36
37
INDUSTRY
Food & Kindred Products
Textiles
Lumber & Wood Products
Paper & Allied Products
Chemicals & Allied Products
Petroleum & Coal
Rubber & Plastics
Leather
Stone, Clay, Glass
Primary Metals
Fabricated Metal Products
Machinery
Electrical Equipment
Transportation Equipment
Manufacturing
1968 Uti
Operating
57.6
11.4
10.1
1T2.3
123.9
48.4
6.1
4.3
21.3
147.3
12.6
10.7
14.1
15.9
600.3
lization Efficiency
Capital1
126.7
32.0
23.6
196.7
309.4
139.2
12.2
11.0
23.1
205.8
15.8
12.7
16.5
15.6
1138.6
Total
184.3
43.4
33.7
309.0
433.3
187.6
18.3
15.3
44.4
353.1
28.4
23.4
30.6
31.5
1738.9
.Median Efficiency
Operating
51.5
10.4
5.3
86.9
71.4
38.1
5.0
4.3
17.3
114.7
9.6
8.0
11.7
9.0
443.1
Capital1
116.0
29.8
14.7
156.9
110.2
103.8
10.5
11.0
19.9
138.4
12.7
10.2
14.4
10.1
757.5
Total
167.5
40.2
20.0
243.8
181.6
141.9
15.5
15.3
37.2
253.1
22.2
18.3
26.1
19.1
1200.6
Most Efficient Third
Operating
43.5
9.1
5.3
75.3
45.7
31.4
3.7
4.3
14.0
88.9
8.6
6.2
10.0
4.8
350.9
Capital1
101.1
27.0
14.7
138.2
75.5
82.2
8.4
11.0
17.0
102.2
11.6
8.4
12.8
6.1
615.2
Total
144.6
36.1
20.0
213.6
121.2
113.6
12.1
15.3
31.0
191.1
20.2
14.6
22.8
10.9
966.2
1
Replacement and Interest
-------
V
CURRENT LEVEL OF INDUSTRIAL WASTE TREATMENT COSTS
Introduction
The chapter evaluates treatment currently provided to industrial wastes
by industry-supplied and public waste treatment plants.
Summation
Though there are significant problems of interpretation, it would seem
that in 1968 manufacturers were operating $2.4 billion worth of waste
treatment works, and that another $1.5 billion worth of public waste
treatment capacity was taken up by manufacturers' wastes.
75
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CURRENT LEVEL OF INDUSTRIAL WASTE TREATMENT COSTS
Evaluation Conditions
It is not possible to gauge beyond the level of gross approximation
the degree to which manufacturers as a group currently meet their waste
treatment requirements. To compound the difficulties of assessment
presented by the various water use, recycling, and process modification
options open to management, there are complications presented by use of
public waste treatment plants, and the fact that data are reported on
industrial investment in a fashion that will not permit consistent
calculations.
In general, it would appear that problems of evaluation tend to result
in an understatement of the current level of waste treatment, in that
waste segregation, internal process adjustments, and use of public
facilities are only slightly—if at all—assessable. To counterbalance
these forces for under-evaluation is the fact that the only investment
data available are those from industry sources, and in the reporting of
such data a certain degree of self-serving is almost inescapable. Addi-
tionally, there is serious question as to the quality of the capital
that is available. Spokesmen for industry admit that at least some of
the adjustments to regulation that have been made in the past were in the
nature of a minimal response. A portion of the available capital is said
to be incompatible with today's more stringent requirements, and so of
limited utility. Even if such claims tend to be advanced to support request
for relief from regulation in the form of subsidies or time extensions,
they cannot be dismissed out of hand.
Industry-Supplied Treatment
Recognizing those difficulties, it is possible to at least partially evaluate
the current replacement value of the waste treatment works that industry
reported to be in operation in 1968, using the same generalized cost-to-size
coefficients utilized to scale treatment requirements. The procedure provides
a value of $2.42 billion for the .6820 treatment components operated by 3521
establishments treating wastewater, as these are cataloged by the Census
Bureau (cf. Table 29). The total value of supplied works may be somewhat
higher than the calculations suggest, due to the fact that 5881 treatment
operations were identified only as "other" than one of the standard treat-
ment procedures (i.e. primary and secondary settling, coagulation, flotation,
pH adjustment, aeration, various biological stabilization'methods, sand
filtration, and chlorination). Judgement and experience suggest, however,
that the bulk of the "other" treatments performed consists of screening,
flow equalization, and similar rudimentary pre-treatment practices whose
costs are calculated as integral components of the defined methods. Total
understatement of costs to be attributed to unreported kinds of treat-
ment is probably not significant.
76
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TABLE 29
CURRENT REPLACEMENT VALUE AND ANNUAL COSTS
ASSOCIATED WITH REPORTED INDUSTRIAL WASTE TREATMENT, 1968
MILLIONS OF 1967 DOLLARS
SIC
20
22
24
26
28
29
30
31
32
33
34
35
36
37
INDUSTRY
Food & Kindred Products
Textiles
Lumber & Wood Products
Paper & Allied Products
Chemical & Allied Products
Petroleum & Coal
Rubber & Plastics
Leather
Stone, Clay & Glass
Primary Metals
Fabricated Metal Products
Machinery
Electrical Equipment
Transportation Equipment
Manufacturing
Replacement
Value
193.8
48.8
9.7
529.5
343.2
342.1
3.0
17.0
20.0
216.3
6.7
14.8
23.8
17.4
1787.0
Operati on
14.8
3.8
1.5
64.5
63.1
73.2
0.3
1.7
1.5
35.0
0.4
0.8
1.5
1.1
263.2
ANNUAL COSTS
Interest
14.9
3.8
0.7
40.8
26.4
26.3
0.2
1.3
1.5
16.7
0.5
1.1
1.8
1.3
137.3
Replacement
9.7
2.4
0.5
26.5
17.1
17.1
0.2
0.9
1.0
10.8
0.3
0.7
1.2
0.9
72.2
Total
39.4
10.0
2.7
131.8
106.6
116.6
0.7
3.9
4.0
62.5
1.2
2.6
' 4.5
3.3
472.77
-------
The notable thing about the currently available stock of treatment works
is, perhaps, its configuration. The reported plants do not generally
conform to the high cost set of procedures used in the evaluation model.
It has been indicated at several points in this report that there are
possible trade-offs between capital and operating costs in the conduct
of the waste treatment activity, and that the optimum mix is to be found
not at the level of the industry, but at the factory. Given such trade-
offs, it is probably reasonable to assess the degree to which any industry
fulfills its waste treatment requirements by level of annual costs as well
as according to capital availability (cf. Table 30). In those terms, it
would appear that American manufacturers in 1968 supplied between 30 and
40 percent of the waste treatment required of them, with enormous variation
in degree of compliance to be found between one industry and another.
Pub!icly-Supplied Treatment
Both the total deviation from compliance with treatment.requirements and
the inter-industry variation in degree of compliance shrink when use of
publicly supplied waste treatment capacity is taken into account. Eight
of the fifteen (two-digit SIC) manufacturing industries discharge a
greater volume of wastewater to public sewers--and so, presumably, to
public waste treatment plants—than they treat (cf. Table 31). There
is a measure of double-counting, in that much of the reported treatment
occurs prior to sewering. Unfortunately, the 1967 edition of Hater Use
in Manufacturing, unlike earlier editions, fails to provide data to assess
the extent of the circumstance. To the degree that this use of public
facilities provides an effective supplement to the capital supplied by
industry itself, it must be considered to reduce the deficiency in indus-
trial waste treatment.
The extent of that supplement must be gauged from very gross and aggre-
gate waste flow data. Thus the best that can be provided is an order
of magnitude kind of estimate, one that places the value of public waste
treatment capital supplied to industry at $0.9 to $2.2 billion. The
range is determined not by differences in conditions but by point of
reference, and whether one attempts to judge the value of the public ser-
vice from the standpoint of its value to the industry that receives it,
or from that of the local government that provides it.
Evaluation of Equivalent Service: If one assumes that the value of treat-
ment of a gallon of wastewater is precisely the same in all cases, without
regard to who supplies the treatment, then the relationship between re-
ported volume of industrially treated wastes, sewered wastes, and value of
waste treatment provided by each industry will provide an evaluation of
publicly supplied industrial waste treatment. Table 32 provides such an
assessment under the column headed "Equivalent Service". Each of the
values in the column was calculated according to the formula:
78
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TABLE 30
PERCENTAGE OF REQUIRED WASTE
TREATMENT SUPPLIED BY INDUSTRY, 1968
Percent of Median Requirement
SIC
20
22
24
26
28
29
30
31
32
33
34
35
36
37
INDUSTRY
Food & Kindred Products
Textiles
Lumber & Wood Products
Paper & Allied Products
Chemicals & Allied Products
Petroleum & Coal
Rubber & Plastics
Leather
Stone, Clay & Glass
Primary Metals
Fabricated Metal Products
Machinery
Electrical Equipment
Transportation Equipment
Manufacturing
Available
Capital
21.2
20.8
8.4
42.8
39.5
41.8
3.6
19.6
12.8
19.8
6.7
18.3
• 21.0
21.8
29.9
Annual
Costs
23.5
24.9
13.5
54.1
58.7
82.5
4.5
25.5
10.8
24.7
5.5
14.2
17.2
17.3
39.4
-------
TABLE 31
00
o
VOLUME OF MANUFACTURERS WASTES, SEWERED
AND TREATED PRIOR TO DISCHARGE BREAK, 1963
Billion Gallons of Discharge
SIC
20
22
24
26
28
29
30
31
32
33
34
35
36
37
Industry
Food & Kindred Products
Textiles
Lumber & Wood Products
Paper & Allied Products
Chemical S Allied Products
Petroleum & Coal
Rubber & Plastics
Leather
Stone, Clay 3 Glass
Primary Metals
Fabricated Metal' Products
Machinery
Electrical Equipment
Transportation Equipment
Misc. and Unidentified
Treated
Discharge
184.7
53.7
18.7
915.3
674.2
917.7
7.3
9.5
36.3
1430.9
9.0
24.5
27.5
22.5
12.7
4353.2
Sewered
Discharge
237.5
50.6
2.5
72.4
181.1
7.5
22.4
10.2
20.4
143.3
38.6
44.5
74.4
77.2
12.8
1021.6
Percent
Sewered
of
Treated
128
94
13 •
8
27
1
335
107
56
10
429
182
270
343
101
23
Of Total
Sewered
Discharge
23.2
5.0
.2
7.1
17.7
.7
2.2
1.0
2.0
14.0
3.8
4.3
7.3
7.6
3.6
100.0
-------
TABLE 32
00
VALUE AND PERCENTAGE OF INDUSTRIAL WASTE TREATMENT
REQUIREMENTS SUPPLIED PUBLICLY IN 1968
BASIS OF ESTIMATE
SIC
20.
22
24
26
28
29
30
31
32
33
34
35
36
37
INDUSTRY
Food & Kindred Products
Texti 1 es
Lumber & Wood Products
Paper & Allied Products
Chemical & Allied Products
Petroleum & Coal
Rubber a Plastics
Leather
Stone, Clay & Glass
Primary Metals
Fabricated Metals Products
Machinery
Electrical Equipment
Transportation Equipment
EQUIVALENT
$ Millions
249.0
45.0
1.3
41.8
92.0
2.7
9.2
18.2
11.2
21.6
40.3
26.9
64.4
59.7
SERVICE
Percent
of Rqmt.
27.2
19.2
1.1
3.4
1.1
0.3
11.1
21.0
7.2
1.9
40.4
33.2
56.6
74.8
UTILIZED CAPACITY
Percent
$ Millions of Rqmt.
381.6
82.2
3.3
116.8
291.1
11.5
36.2
16.4
32.9
230.3
62.5
70.7
120.1
125.0
40.7
35.0
2.9
9.4
33.5
1.1
43.6
19.0
21.0
21.6
62.6
67.5
116.0
157.0
Manufacturing
684.5
11.5
1644.8
27.6
-------
where: Gs = gallons of wastewater discharged by the industry to
public sewers in 1968, as reported in Water Use in
Manufacturing, 1968;
Gt = gallons of wastewater treated prior to discharge by
the industry in 1968;
C = current replacement value of waste treatment facili-
ties provided by the industry in 1968, as calculated
by the evaluation model and summarized in Table 29.
The procedure almost certainly results in an understatement of values
received, in that the average degree of waste reduction accomplished
by municipal waste treatment plants is considerably higher, thus incor-
porating more capital values, than the average degree of treatment
provided by industry itself, if we are to judge on the basis of reported
waste treatment procedures available to municipalities and to factories.
Evaluation of Utilized Capacity: If one assumes that the value of waste
treatment service provided to industries by local governments is propor-
tional to the amount of their capacity taken up by industrial wastes,
then the relationship between total sewage flow, total capacity, non-
industrial sewage flow, and value of municipal waste treatment plants
will provide an evaluation of the publicly supplied waste treatment
capacity devoted to industrial wastes. Table 32 provides such an assess-
ment under the column headed "utilized capacity". Each of the values
in the column was calculated according to the formula:
[(Iv X Tv * T0 - 10°P) C] X S1
where: T = total municipal waste treatment capacity in 1968, as
reported in the Municipal Haste Inventory and summa-
rized in Table 25, Cost Effectiveness and Clean Water
(26.4x106 G/D);
Tv = utilized waste treatment capacity, excluding over-
loading (20.8 x 106 G/D);
T = net overloading of waste treatment plants (2.6 x 106
G/D);
82
-------
100 = rule of thumb per-capita sewage discharge;
P = population served by waste treatment (137 x 10^
persons);
C = current replacement value of municipal waste treat-
ment plants in 1968 as reported in Table 12, Economics
of Clean Water ($4,934.4 x 106, 1967 = 100)
S. = sewered discharge for a given industry, as reported
in water Use in Manufacturing, 1968; '
S = total sewered discharge of manufacturers.
While the procedure probably gives a better evaluation than does the
assessment of equivalent service, there is unquestionably some overstate-
ment to be attributed to inadequate accounting for non-factory discharges
in excess of 100 gallons per-capita per day, capitalization in excess of
what industry itself would provide for a similar solution (an evaluation
of share of annual charges rather than capital shares might obviate the
weakness), and the necessity on the part of site-bound plants to dis-
charge uncontaminated waters to sewers where they exercise a demand on
available capacity without receiving any effective treatment service.
Striking a Balance
Clearly, there are enormous uncertainties remaining after the various
evaluation procedures have been conducted. Manufacturers' waste treat-
ment requirements in 1968 occupied a range between $4 billion and
$12.2 billion. Industry itself supplied between $2.4 billion and $3.1
billion (based on percentage of annual costs) of that amount, and public
sources provided an additional $0.9 to $2.2 billion toward the satis-
faction of the requirement. At one extreme, it could be stated that the
total capital demand was over-supplied; at the other, that only $3.3
billion, or less than a third, had be'en supplied.
Where the data provide such divergence, interpretation and judgement
become necessary. It would appear that (though no single set of condi-
tions can be described as accurate) the most valid estimate of the
situation is one that assesses requirements at the median level of
efficiency, evaluates industry-supplied treatment on the basis of capital
available, and weighs the public sector contribution somewhere be-
tween the points provided by capital utilization and equivalent service.
Table 33 hazards such a summation. While the detail is open to serious
question, even at the very high level of aggregation employed, the order
of magnitude of the components would seem to be highly reasonable:
requirements, $8.3 billion; available capital supply, $4.0 billion;
unmet demand, $4.3 billion.
83
-------
00
TABLE 33
INDUSTRIAL WASTE TREATMENT SITUATION SUMMARY, 1968
MILLIONS OF 1967 DOLLARS
SIC
20
22
24
26
28
29
30
31
32
33
34
35
36
37
INDUSTRY
Food & Kindred Products
Textiles
Lumber & Wood Products
Paper S Allied Products
Chemicals & Allied Products
Petroleum & Coal
Rubber & Plastics
Leather
Stone, Clay & Glass
Primary Metals
Fabricated Metal Products
Machinery
Electrical Equipment
Transportation Equipment
Manufacturing
Capital
By Industry
193.8
48.8
9.7
529.5
343.2
342.1
3.0
17.0
20.0
216.3
6.7
' 14.8
23.8
17.4
1787.0
Supnlied
Publicly'
315.3
63.6
2.3
79.3
191.5
7.1
22.7
17.3
22.0
125.9
51.4
48.8
92.2
92.3
1131.7
Medi an
Requirement
913.3
234.8
115.8
1235.6
867.6
817.4
82.9
86.5
156.5
1089.8
99.9
80.7
113.5
79.8
5964.2
Deficiency
404.2
122.4
103.8
626.8
332.9
468.2
57.2
52.2
114.5
747.6
41.8
17.1
(2.5)
(12.5)
3045.5
Maxi mum
Requirement
997.5
251.4
186.1
1550.5
2436.8
1096.1
96.0
86.8
182.3
1620.5
124.1
100.1
129.5
122.7
8965.7
Deficiency
438.4
139.0
174.1
941.7
1902.1
746.9
70.3
52.5
140.3
1278.3
66.0
36.5
13.5
13.0
6047.0
^Mid-point of estimates presented in Table 32.
-------
VI
WASTE TREATMENT COSTS THROUGH 1976
Introduction
The chapter assesses manufacturers' waste treatment investments since
1968, projects investments and annual costs consistent with a policy
of full compliance with effluent standards by 1976, and relates those
costs to annual cash flow and prices of manufactured goods.
Summation
On the basis of industry-supplied data, manufacturers investments in
the period 1969-1971 roughly doubled the value of industrial waste
treatment supplied in 1968. Expressed investment intentions and invest-
ments reported for the last four years are generally consistent with--
though slightly below—the values thought to be necessary to achieve
full effluent treatment compliance by 1976. In total, manufacturers
must anticipate a probable cash flow of $20 billion (1971 = 100) over
the years 1968-1976, in connection with compliance to effluent standards,
While incremental annual costs will probably amount to only about 0.2
percent of aggregate values added by manufacturers, up to 4 percent of
total capital spending will be required to comply with standards, and as
much as 1 percent of values added in some industries (pulp and paper,
steel) will be provided by waste treatment. If additional costs are
passed forward to consumers, with full maintenance of margins, prices of
manufactured good may increase a little more than 0.1 percent.
85
-------
WASTE TREATMENT COSTS THROUGH 1976
The Situation Since 1968
Although absence of industrial waste data precludes any coherent associa-
tion of the conditions evaluated in the previous chapter with events of
the last three years, it is possible to make some assessment of trends
in terms of capital accumulation.
Since 1968, McGraw Hill & Co. has included a survey of pollution control
expenditures in its first quarter survey of capital spending intentions.
That survey is the only consistent source of information on manufac-
turers' waste treatment outlays. And though it is presented in aggregate
terms that make direct correlation with interpretations derived from
Bureau of Census data difficult, it does contain a high measure of author-
ity, and adds considerably to our understanding of evolving conditions.
Taken at face value, the survey indicates that manufacturers' investments
for waste treatment have been rising at an almost 20 percent annual rate,
after adjustment for inflation, and that reported investment since 1968
is sufficient to have roughly doubled the available capital stock
(cf. Table 34).
There are obvious problems in interpreting the data. On the quantitative
side, the user runs up against a set of reporting conventions that lists
standard industrial classifications by major business of the firm rather
than the factory. The vertically integrated firm and the conglomerate
make any comparison with the situation summary presented earlier (Table
33) very tenuous. There is not even any assurance that the indicated invest-
ments relate to the manufacturing sector; the degree of integration in
many predominantly manufacturing firms extends to the conduct of transporta-
tion, agriculture, mining. And for the extractive industries it is probably
safe to assume that environmental controls in the extraction process (e.g.
oil drilling—or even exploration) are as great, or greater, a source of
investment demand as are treatment requirements at the factory. Certainly
the data reported by the petroleum industry to McGraw Hill & Co. and the
American Petroleum Institute's excellent study, 1967 Domestic Refinery
Effluent Profile, are consistent with an assignment of major cost at points
other than the refinery.
Nor can these dollar amounts be related to specific physical facilities.
To what extent they reflect production shifts and process rationaliza-
tions that contribute to waste reduction but are in themselves necessary
86
-------
TABLE 34
INVESTMENT, 1969-1971
(AS REPORTED BY McGRAW HILL & CO.)
MILLIONS OF DOLLARS
19691
SIC
20
22
24
26
28
29
30
31
32
33
34
35
36
37
Food & Kindred
Textiles
Lumber & Wood Pdts.
Paper & Allied
Chemical & Allied
Petroleum & Coal
Rubber & Plastics
Leather
Stone, Clay & Glass
Primary Metals
Fabctd. Metal Pdts.
Machinery
Electric Eqpt.
Misc. & Unidentified
TOTAL
Total
32
7
N.A.
88
47
143
3
N.A.
24
115
23
20
16
96
643
Inflation
-3
-1
-9
-5
-14
-
- 2
-11
- 2
- 2
- 2
-10
-64
Repl acement
-10
- 2
-26
-17
-17
-
- 1
-n
- 5
- i
- i
-n3
-94
Net
19
4
53
25
112
3
21
93
16
J7
13
75
476
Total
46
9
N.A.
94
90
185
18
N.A.
25
140
28
39
27
140
87
1970
Inflation
-8
-2
-16
-15
-31
- 3
- 4
-24
- 5
- 7
- 5
-24
-149
Replacement
-11
- 2
-29
-18
-23
-
- 2
-16
- 5
- 2
- 2
-153
-127
Net
27
5
49
57
131
15
19
100
18
20
101
596
Total
87
21
N.A.
185
133
227
21
N.A.
42
135
33
53
29
109
1133
19712
Inflation
-23
- 6
-50
-36
-61
- 6
-11
-36
- 9
-14
- 8
-29
-305
Replacement
-13
- 3
-32
-21
-29
- 1
- 3
-21
- 6
- 3
- 3
-163
-154
Net
51
12
103
76
137
14
28
78
18
36
18
64
674
Total
Investment
165
37
N.A.
367
270
555
42
N.A
91
390
84
112
72
345
2648
Net
Investment
97
21
N.A.
205
158
380
32
N.A.
68
271
52
83
51
240
1746
^Distribution between Water and Air Pollution Abatement assumed to be same as reported for 1970.
Planned Investment.
3Total replacement—that accounted for in other rows.
-------
or profitable simply cannot be determined. (Though the Conference Board
Survey mentioned earlier leads to the inference that roughly 30 percent
of the investment is for such purposes.) Nor can the extent to which they
include the write-off of properties that are being taken out of production--
one of the most convenient means of bringing an obsolescent factory into
compliance at a time when a quarter of productive plant and equipment is
idle.
The point is not that the reported values published by McGraw Hill & Co.
are suspect. There is no reason to infer any lack of credibility. Rather,
it should be understood that these data are not consistent with those used
elsewhere in this report—they are from a different source, apply to different
uses, evaluate separate aspects of the situation.
What is significant about them, in the context of this report, is their
magnitude and their trend. They suggest that most segments of manu-
facturing are investing aggressively for water pollution abatement, and
that regulatory incentives as presently structured are securing a healthy
response. Attainment of current discharge standards by 1976 is not likely
to occur at the mean level and existing distribution of industrial invest-
ments since 1968--but if the trend of increase is sustained, and the
inter-industry pattern of outlays is modified, the experience of the last
three years may be construed as favorable.
An Investment Schedule
While the water pollution abatement schedule to be met by any industry or
any firm represents a diverse mix of compliance order dates, negotiated
understandings, and internal decisions, there is an administratively expressed
target of full national compliance by 1976. Given more than 14,000 signifi-
cant manufacturing users of waters and nine years time, there is a nearly
infinite number of investment possibilities that are consistent with the
target.
The most likely schedule must be assumed to be one that eliminates deficiencies
at a fairly even rate, while the processes of growth and replacement assert
their effects quite naturally as functions of the capital structure and the
rate of economic activity.
Such a schedule, assuming the probable set of costs associated with median
hydraulic efficiency and a rate and distribution of output growth for the
period 1968-76 similar to that of 1959-68, dictates the investment of $11.2
billion between 1968 and 1976 for treatment of manufacturers' wastes
(cf. Table 35).
There is no implication of optimality in the schedule advanced. (And no
judgement as to the source of investment, some of which will certainly
come from the public sector as a result of industrial discharge to sewers.)
It is simply proposed as the most likely response to regulation in the
absence of any formal schedule.
-------
TABLE 35
ANNUAL EXPENDITURES CONSISTENT WITH
STANDARDS COMPLIANCE BY 1976
(PROBABLE COST: MEDIAN EFFICIENCY)
CAPITAL EXPENDITURE,1 MILLION OF DOLLARS, 1967
co
SIC
20
22
24
26
28
29
30
31
32
33
34
35
36
37
INDUSTRY
Food and Kindred Products
Textiles
Lumber & Wood Products
Paper & Allied Products
Chemical & Allied Products
Petroleum & Coal
Rubber & Plastics
Leather
Stone, Clay & Glass
Primary Metals
Fabricated Metal Products
Machinery
Electrical Equipment
Transportation Equipment
Manufacturing
For Comparison:
Reported Investment
1968
93.8
24.1
12.4
118.8
65.0-
72.6
9.5
9.0
17.1
112.7
11.2
8.4
11.7
8.2
574.5
416
1969
114.7
31.9
12.4
134.4
110.3
79.2
13.5
11.1
19.9
162.9
16.2
9.1
15.4
9.6
740.6
579
1970
125.5
35.4
13.3
146.2
123.6
85.2
15.0
12.1
21.9
182.0
18.0
9.9
16.9
10.5
815.5
723
1971
131.4
37.6
13.7
152.5
134.2
88.3.
15.9
12.7
23.0
194.6
19.0
10.3
17.8
10.9
861.9
828
1972
137.4
39.8
14.2
158.9
146.2
91.3
16.8
13.2
24.0
208.2
20.1
10.7
18.6
11.4
910.8
1973
143.4
42.1
14.6
165.3
160.0
94.1
17.7
13.8
25.1
222.9
21.2
11.1
19.5
11.8
962.6
1974
149.5
44.6
15.1
171.8
176.1
97.4
18.6
14.3
26.2
238.8
22.4
11.5
20.3
12.3
1018.9
1975
155.6
47.1
15.5
178.4
• 195.0
100.4
19.6
. 14.9
27.3
256.2
23.5
11.9
21.2
12.8
1079.4
1976
161.9
49.7
16.0
185.1
217.2
103.5
20.6
J5.5
28.5
' 275.3
24.7
12.3
22.1
13.2
1145.3
TOTAL
1213.2
352.3
127.2
1411.4
1327.6
812.3
147.2
116.6
213.0
1853.6
176.3
95.2
163.5
100.7
8110.1
Capital
Required,
1976
1102.3
317.1
98.9
1380.9
1439.9
872.3
121.3
104.9
183.5
1649.3
147.4
85.9
147.4
92.3
7743.4
'Net investment (difference between median requirement and industry-supplied capital at 1968) plus annual growth and replacement.
-------
There is no question that the indicated schedule will be difficult to
achieve. Manufacturers are responding to waste treatment requirements
at the same time that the public sector is increasing its capitalization
of waste treatment works. Total sewerage starts had not reached a billion
dollars as late as 1967; but in 1971, manufacturers and municipalities
together initiated about $3.0 billion of sewerage and waste treatment con-
tracts. As a consequence of such growth, extreme inflation and lengthening
construction schedules have marked this particular component of the con-
struction industry. Whether it can continue to expand sufficiently to meet
the schedule, and what price the economy will pay in terms of inflation and
quality defects, are probably the critical questions with respect to the
waste treatment target.
Unfortunately, there has been little recognition of this really difficult
functional problem. Policy formulation in both the public and private
sectors has been concerned principally with questions of demand—how much
treatment is needed? how much will it cost? and who will pay? Subordinate
issues of employment displacement and regulatory mechanics have also been
engaged. But in spite of increasing evidence in the form of delayed de-
liveries, lengthening construction times, and soaring construction costs,
the ability of the sewerage construction industry to supply a ballooning
demand has never been investigated, and scarcely questioned. There is
reason to believe, however, that the supply of suitable construction
services will prove far more critical to meeting waste discharge standards
•by 1976 than will financial commitment.
It should be noted that secular expansion of the level of investment is
necessary, even with a constant increment abatement strategy. Growth
and replacement demands account for over half of the indicated capital
requirement to 1976, and their level is in large measure determined by
the dimensions of the capital base. The schedule illustrated in Table 35
may be slightly over-ambitious in that it embodies rates of output growth
that applied in one of the most expansionary periods in our history. A
slower rate of economic growth would, of course, permit attainment of the
target with a lower rate of increase than the 8.9 percent per year dictated
by the projection. But internal growth of the system—that is, installa-
tion of the treatment capital associated with 1968 output levels—is a
more significant influence on the indicated annual level of investment
than the external imposition of treatment requirements that arises out
of projected production growth.
If we can judge from manufacturers' investments reported by McGraw Hill
& Co., the scheduling procedures actually being used by industrial
management must adhere fairly closely to the constant increment strategy
embodied in the projection. Reported investments since 1968 have
advanced at a much faster rate (19 percent a year, exclusive of infla-
tion) than the illustrated schedule., but their approximate dimensions,
though somewhat lower, are much the same. This expansion of water pollu-
tion abatement investment has been in contrast to total plant and equipment
90
-------
expenditures by manufacturers, which has adopted a slightly downward slope
over the last four years when adjusted for price level changes. In con-
sequence, the proportion of total manufacturers' reported investments
devoted to waste treatment works has risen from 1.5 percent in 1968, to
2.0 percent in 1969, 2.5 percent in 1970, and an estimated 3.1 percent
in 1971.
Given a resumption of the rate of capital accumulation that occurred in
the period 1959-68, just under 3 percent of manufacturers' investment
must continue to go to waste treatment through 1976 if the target is to
be met. But maintenance of a flat pattern of non-inventory investment
through 1976 would dictate that an increasingly large share of total
investment would be required for the purpose—up'to 4 percent, based
upon the indicated amount of expenditures for plant and equipment in
1971.
Manufacturers' Investment Intentions
Not only do reported investments of manufacturers over the last four
years indicate a pattern of behavior that is generally consistent with
attainment of current waste treatment goals, but also the information we
possess with respect to their longer range intentions is not inconsistent
with the same purposes.
Again, McGraw Hill & Co. is the source of our information. It has re-
ported "the total cost of bringing industries' (sic) existing facili-
ties up to present pollution control standards as of January 1, 1971,"
as industrial management has assessed that cost. Unfortunately for the
purposes of this report, there is no available distinction between
expenditures for air pollution control, water pollution control, and
other forms of environmental protection. We are forced to draw infer-
ences from prior experience. There are the additional difficulties of
categorization presented by multi-establishment, multi-industry firms.
And, unlike the schedule against which these intentionsjnust be com-
pared, there is no statement of time associated with reported dollar
values. Nonetheless, the information is useful, and moderately
reassuring.
Limiting our consideration to the manufacturing sector, we find that
industry in the aggregate is operating on the assumption that an invest-
ment of $12.36 billion is required to meet environmental standards
(cf. Table 36). Of that, roughly half—on the basis of the recent past-
may, perhaps, be allotted to water pollution control projects.
91
-------
Table 36
MANUFACTURERS' ASSESSMENT OF INVESTMENTS
REQUIRED TO COMPLY WITH POLLUTION CONTROL REQUIREMENTS, JAN. 1971
(as reported by McGraw Hill & Co.)
SIC
20
22
24
26
28
29
30
31
32
33
34
35
36
37
Industry
Food & Kindred Products
Texti 1 es
Lumber & Wood Products
Paper & Allied- Products
Chemical & Allied Products
Petroleum & Coal
Rubber & Plastics
Leather
Stone, Clay, & Glass
Primary Metals
Fabricated Metal Products
Machinery
Electrical Equipment
Transportation Equipment
Manufacturing
Millions of
1970' Dollars
400
no
N.A.
1,840
1,000
2,120
300
N.A.
160
4,260
190
690
210
440
12,360
Percent to Water
Pollution, 1970-71
57%
34%
N.A.
59%
52%
49%
42%
N.A.
40%
59%
50%
32%
51%
37%
48%
92
-------
There are some distressing inter-industrial divergences from the values
produced by the evaluation model, and there are some huge definitional
questions. But when the projected investment schedule and the indus-
trial expressions are.considered in their most aggregated form, in same
year dollars with appropriate situational adjustments, they are very
close:
Industry intentions (48 percent of total
in 1967 dollars) $4,372 million
•
Projected capital requirements $8110 million
Less public capital available, 1968 (1132 million)
Less reported investment, 1969-71 (2130 million)
Net capital requirements $4,848 million
The relationship is comforting in the aggregate and on first inspection,
if we assume that public treatment of industrial wastes stays fairly
constant—but we do not know enough about the values supplied by industry
to feel entirely at ease. There is, of course, the inter-industry dis-
tribution of intentions as a prime cause of aggravation. But other
matters also .need to be defined.
1. There is considerable question as to whether the portion of
industry's pollution abatement investment that is available for water
pollution control will stay constant. Both air and water pollution
control expenditures have been rising for a decade, but the relative
share to water (where the bulk of the money has gone in the. past) has
been shrinking. In the early nineteen-sixties, surveys by the National
Industrial Conference Board found 60 percent of manufacturers' environ-
mental protection investments devoted to water. In the last half of the
sixties, water's share had dropped to 52 percent. And in the last two
years, McGraw Hill's data shows water pollution abatement supplying less
than half of environmental capital expenditures by industry. Air pol-
lution regulation has become far more stringent, and the general
impression is that industrial deficiency in that area is greater. Hence,
it seems likely that outlays for water pollution control will continue to
decline in a relative sense.
2. Because the values are reported in their least useful form, an
aggregated lump, we have little insight into their referents. We do
not know if they are for treatment facilities, for reworking processes,
for fuel substitutions, for plant abandonment, or any of a host of possi-
ble alternatives. Nor do we know if they include investments in 1971
and prior years, or how many years into the future they may include.
93
-------
3. To what extent the estimates account for anticipated inflation
determines to some extent how adequately they will cover the eventual
bill. The assumption used in balancing the estimates against indicated
requirements was that they represented 1970 constant dollars. There is
no hint in the report of the possible validity of that assumption.
The combined weight of these considerations must leave the analyst with
some reservations as to whether U.S. manufacturing adequately recognizes
the dimensions of the investment it must make for water pollution control
over the next five to six years. While the indicated intentions are, on
the surface, generally consistent with evaluated requirements—particularly
in a context that includes the availability of public facilities and lower
cost treatment configurations—there are too many undefined possibilities
for shortfall to provide a high measure of satisfaction.
Cash Flow Implications
To meet the 1976 compliance target will cost American manufacturers
between $10 billion and $25 billion.between 1968 and 1976. The ulti-
mate amount of direct expenditure will depend principally on the
compliance strategy that the preponderance of management adopts.
Maximum application of water conserving production process, with an
attendant increase in disposition of residuals in dry form, could
eliminate more than half of the cost of waste treatment. However, the
reduction in the one kind of cost could entail disproportionate in-
creases in other costs, or the application of significantly greater
amounts of capital than would be consistent with other investment
demands. Persistence of high interest rates would be expected to
inhibit realization of a low liquid waste strategy, too, in that such
an approach to waste production would probably require very signifi-
cant recapitalization of existing production facilities.
A high cost strategy would seem as unlikely as one devoted to minimum
waste treatment costs. In essence, the highest set of costs associated
with industrial waste treatment is predicated on the assumption that
industry would meet its waste treatment requirements by simply adding
necessary treatment facilities to production conditions in existence
in 1968, making no effort to adjust production processes to those treat-
ment facilities or to take indicated water conservation measures to
reduce costs.
The probable path to achievement of discharge requirements appears to
be at some intermediate route between the two extremes; and the gross
magnitude of the manufacturer supplied capital requirements assessment
tends to corroborate that judgement. Without significantly recapitalizing
existing factories, manufacturers may be expected to make obvious adjust-
ments in water utilization practices to' accommodate waste treatment, to
94
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close those marginally profitable factories for which adequate waste
treatment would impose either a significant incremental investment or
serious technical problem, and otherwise to accommodate to discharge limits
by providing waste treatment. Over the longer run, new plants may be
expected to incorporate cost-reducing water utilization procedures that
result in a slightly higher capital to output ratio for the plant as a
whole, but a distinctly lower unit cost of waste treatment.
It is that scenario which is felt to be most adequately characterized by
the projection of conditions to 1976 that was presented in terms of
investment in Table 35.
When that set of conditions is extended to cover interest and operating
charges, it suggests the probable expenditure of more than $20 billion
by manufacturers for waste treatment between 1968 and 1976 (cf. Table
37). Of that amount, more than half—almost $11 billion—will be required
for capital investment to eliminate existing deficiencies, to provide
for increased output, and to maintain the capital stock through the
replacement process.
The heavy demand for capital is consistent with the significant shortage
of waste treatment among manufacturers. However, a part of that capital
is being, and will be, supplied through public sources. It might be
assumed, then, that actual capital outlays of manufacturers over the
period will be somewhat less than is indicated, with operating charges
being much greater as a result of payment of user charges to public
authorities.
On balance, the use of public facilities could marginally reduce short-
term cash flow requirements, in that capital contributions would be
engaged through the amortization schedules built into user charges, and
thus largely deferred to later years. In addition to relief from cash
flow pressures, use of public facilities suggests opportunity to utilize
the more advantageous interest rates provided by tax free bonds, to profit
from the longer average life (25 years, rather than 20) of. the more
heavily capitalized plants found in the public sector, and to enjoy the
operational cost savings also afforded by higher capital inputs per unit
of capacity. (These advantages apply in addition to possible scale
economies, the subsidy features provided through State and Federal capital
inputs, or the additional subsidies quite often advanced by municipal
government in the form of discriminatory user charges or payment for
sewerage services from general taxation.)
In spite of those apparent advantages to be obtained by making use of
public facilities, only slight reduction of cash requirements is thought
likely to eventuate from that source by 1976. The reasons are to be
found in technical and institutional aspects of industrial waste treat-
ment.
95
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TABLE 37
PROJECTED CASH OUTLAYS ASSOCIATED WITH ATTAINMENT
OF DISCHARGE STANDARDS BY 1976
(MEDIAN EFFICIENCY)
MILLIONS OF 1967 DOLLARS
VD
CTl
OUTLAYS, 1968-1976
SIC
20
22
24
26
28
29
30
31
32
33
34
35
36
37
Industry
Food & Kindred Products
Texti 1 es
Lumber & Wood Products
Paper & Allied Products
Chemical & Allied Products
Petroleum & Coal
Rubber & Plastics
Leather
Stone, Clay, Glass
Primary Metals
Fabricated Metal Products
Machinery
Electrical Equipment
Transportation Equipment
Manufacturing Total
(1971 Dollars)
Net
Investment
722
186
99
856
324
475
80
70
138
873
93
66
90
62
4,134**
(5,610)
Growth
189
82
_*
145
572
- 55
38
18
27
560
48
5
34
13
1,786
(2,424)
Replacement
302
84
28
410
432
282
29
29
48
421
36
24
40
26
2,191
(2,973)
Interest
474
131
44
641
671
439
45
45
75
659
56
37
62
40
3,419
(4,639)
Operations
413
77
26
591
729
265
36
29
108
917
70
48
83
59
3,451
Total
2,100
560
197
2,643
2,728
1,516
228
191
396
3,430
303
180
309
200
14,981
Total
1971 Dollars
2,850
760
267
3,587
3,702
2,057
309
259
537
4,655
411
244
419
271
20,329
(4,683) (20,329)
Maximum Cost Total
(1971 Dollars)
Minimum Cost Total
(1971 Dollars)
5,430 1,845 2,520
(7,369) (2,504) (3,420)
1,416 880 1,267
(1,922). (1,194) (1,719)
3,939 4,637 18,609
(5,345) (6,292) (25,252)
1,976 1,792 7,322
(2,669) (2,432) ( 9,936)
*Rate of improvement in water productivity is greater than rate of growth of output.
**Does not account for publicly supplied waste treatment.
-------
On the technical side, water use and waste treatment requirements are
heavily concentrated in a few industries. Of these, both the scale of
operations and the nature of wastes in only one, food processing, is
generally amenable to conventional sewage treatment. Much of the
chemicals industries, and most pulp and paper, petroleum refining, and
primary metals industries represent difficult--in some cases insu-
perable—problems in the context of sewage treatment. Probably, less
than half of industrial wastes (though this includes the wastes of the
vast preponderance of all factories) could be treated by sewage treat-
ment organizations if circumstances were otherwise generally favorable.
A number of institutional factors, however, are so clearly unfavorable
that it does not now seem probable that the percentage of industrial
wastes that is publicly treated will increase much beyond the current
7-8 percent.
1. The same loss of operational flexibility that motivates manu-
facturers to avoid heavy capital commitments for waste treatment (even
at the expense of higher total costs) causes them to avoid too intimate
an association with municipal treatment when liquid waste disposal is
a significant feature of factory operations. Limitations on the
volume and kinds of wastes that may be discharged to sewers may present
a real or potential constraint on operations, or may imply pretreatment
costs significant enough to override the advantages of the arrangement.
Additionally, it is becoming increasingly common for municipalities
.to regularize their relationships with discharging factories by long-
term contracts that, in protecting the municipality's revenue source,
tie the factory to a fixed schedule of payments.
2. Municipal waste treatment works represent only a fraction of
the total cost of sewerage, in that the treatment plants are tied to
elaborate collection and transmission systems that account for a major
share of capital values, and a substantial portion of annual costs.
Economies of scale are slight—and may be negative—with respect to
collection costs. Yet municipal sewerage systems have in recent years
demonstrated a tendency to increase in size and reach. This tendency
has carried with it substantial acceleration of replacement charges, as
existing plants are abandoned through tie-ins with larger systems.
Conforming to the general trend toward more capital intensive municipal
waste treatment, the amount of capacity provided per unit of demand
has also been rising. Under these circumstances, the manufacturer
who connects to a public system does so at the risk of becoming a
contributor to revenue demands associated with heavy fixed charges
and increasing redundancy.
3. Waste treatment requirements have for some years been evolving
in the direction of greater stringency and greater specificity. The
principal attraction of the municipal sewerage system to the manufacturer
has been the breadth of its application. Elimination of specific
contaminants can often be done more easily and more cheaply within the
97
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vo
CO
TABLE 38
INCREMENTAL WASTE TREATMENT
COSTS RELATED TO VALUES
ADDED BY MANUFACTURERS, 1968
Millions of 1967 Dollars
SIC
20
22
24
26
28
29
30
31
32
33
34
35
36
37
INDUSTRY
Food and Kindred Products
Textiles
Lumber & Wood Products
Paper & Allied Products
Chemical & Allied Products
Petroleum & Coal
Rubber & Plastics
Leather
Stone, Clay & Glass
Primary Metals
Fabricated Metal Product's
Machinery
Electrical Equipment
Transportation Equipment
Manufacturing
1968
Industry
Supplied
39.4
10.0
2.7
131.8
106.6
116.6
0.7
3.9
4.0
62.5
1.2
2.6
4.5
3.3
472.7
Conditions
Sewer
Charges'
46.0
9.3
0.4
11.6
28.0
1.0
3.3
2.5
3.2
18.4
7.5
7.1
13.5
13.5
165.3
Total
85.4
19.3
3.1
143.4
134.6
117.6
4.0
6.4
7.2
80.9
8.7
9.7
18.0
16.8
638.0
Increase
for Full
Compliance
82.1
20.9
16.9
100.4
47.0
23.9
11.5
8.9
30.0
172.2
25.7
8.6
8.4
2.3
514.8
Incremental
Value
Added
0.3%
0.2%
0.3%
1.0%
0.2%
0.1%
0.2%
0.3%
0.3%
0.8%
0.1%
0.03%
0.03%
0.01%
0.2%
^Calculated from value of capital supplied publicly, Table 33, on basis of mean ratio of
sewerage operating costs to treatment plant value at 5.1 percent, 3 percent replacement rate,
and interest charge of 6.5 percent.
-------
production process than by waste treatment. Moreover, some of the
pollutants that are to be reduced in sewage treatment do not occur
in the wastes of all manufacturers (e.g. pathogenic organisms and excess
phosphorus). Thus to be tied to a municipal system implies for the
plant manager the possibility of paying—and at the margin—for treat-
ment of wastes that he might more cheaply eliminate himself, or which
he does not discharge.
These institutional factors should not be expected to eliminate public
treatment of industrial wastes, but they should slow materially, if
not reverse, the trend toward cooperative waste treatment that has
marked the last decade. Site constraints and processing patterns that
do not make heavy use of water will probably continue to direct the
wastes of most factories into metropolitan sewerage systems. But
among the manufacturers who make the largest use of water, cooperative
solutions are becoming less and less attractive. Capital shortage and
location-induced absence of options are probably the principal remaining
incentives for the large industrial user of water to abandon operational
control of waste treatment, at this time exceeding both subsidy advantages
and the relief from regulatory pressure which had been prime motivating
forces in the past.
Given that set of conditions, it is probable that the bulk of the cash
requirements associated with industrial waste treatment will be met
by industry out of internally generated cash flow or by recourse to
financial markets.
The ability of manufacturers to generate the indicated cash flow will
probably best be related to total values added by manufacturing. Waste
treatment is, after all, nothing more than an additional manufacturing
process that confers some-incremental utility to purchased materials.
It is true that the utility does not flow directly to the user of the
product. (Except, perhaps, to the extent that he derives a psychic
benefit from the enjoyment of non-polluting characteristics of his
consumption pattern.) But the same is true of many of the character-
istics of value added. The external character of the particular utility
component is in no way different from taxes, advertising, working con-
ditions and wage differentials, or many other components of the value
added by the manufacturing process to a particular commodity.
It is clear that a process whose capitalization will require no more than
3 to 4 percent of manufacturers' investments over the next five
years will constitute a very small incremental cost, or value added,
when the full range of resources that goes into the manufacturing process
is taken into account. In the aggregate, the difference between value of
waste treatment provided in 1968 and that estimated to be necessary at
the probable level of hydraulic efficiency amounts to a 0.2 percent
incremental cost (cf. Table 38). (Under the maximum cost of treatment
evaluation set, incremental annual costs would amount to 0.4 percent of
values added in 1968.)
99
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More significant than the aggregate level relationship, however, is the
incidence of added costs among industries. Depending on the significance
of water as a raw material and the degree of required treatment already
available, the increase in relative costs occupies three orders of mag-
nitude, ranging from .01 percent of values added for transportation
equipment up to a full percentage point for pulp and paper.
Price Level Impacts
It would scarcely seem that cost increases of the dimensions indicated
would threaten any industry—not even the paper or primary metals
producers who will bear such a significant share of the total cost.
But it seems even less likely that management would be satisfied to
absorb such costs. If absorbed, the incremental costs in 1968 would
have reduced the $53.3 billion (1967=100) pre-tax profits of manufac-
turers by 0.9 percent, and would have probably imposed a reduction of
several percent on low-margined steel, paoer, and food processors.
Price increases to cover the additional values conferred are, then,
likely. And it is almost equally likely that such increases will be
framed in dimensions that are consistent with maintenances of margins.
While no technique short of a complex input-output analysis is available
to trace the total impact on prices through the transaction chain—and
the bulk of the impact is introduced with first stage processors very
early in the chain, thus subject to a series of markups before its effect
is exhausted in the ultimate retail sale—gross markups can be calculated
quite easily, and these are sufficient to sustain order-of-magnitude
judgments about impact on the prices of manufactured goods(cf. Table 39).
Giving full expression to calculated markups, and providing not only for
recovery of costs but maintenance of margins, such calculations disclose
that the costs of incremental waste treatment could have been passed on
to consumers in 1968 for little more than a 0.1 percent aggregate increase
in the prices of manufactured products. (Manufacturers' sales, in 1967
dollars, are estimated by the Department of Commerce to have been $607
billion in 1968.)
100
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TABLE 39
INCREASES IN THE PRICES OF MANUFACTURED GOODS
TO BE ATTRIBUTED TO WASTE TREATMENT COMPLIANCE, 1968
CONDITIONS
(Millions of 1967 Dollars)
SIC
20
22
24
26
28
29
30-
31
32
33
34
35
36
37
INDUSTRY
Food and Kindred Products
Texti 1 es
Lumber & Wood Products
Paper & Allied Products
Chemical & Allied Products
Petroleum & Coal
Rubber & Plastic
Leather
Stone, Clay & Glass
Primary Metals
Fabricated Metal Products
Machinery
Electrical Equipment
Transportation Equipment
Manufacturing
Incremental
Values
Added
82.1
20.9
16.9
100.4
47.0
23.9
11.5
8.9
30.0
172.2
25.7
8.6
8.4
2.3
514.8
Indicated
Markup'
.191
.172
.183
.238
.396
.144
.253
.202
.312
.213
.234
.226
.221
.197
Price
Effect
97.8
24.5
20.0
124.3
65.6
27.3
14.4
10.7
39.4
208.9
31.7
10.5
10.3
2.8
688.2
1
Values added, less payrolls, divided by value of shipments.
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APPENDIX: THE INDUSTRIAL WASTE TREATMENT MODEL
Model Components and Logic
The data and interpretations of this report are based largely upon
a modelled restructuring of Water Use in Manufacturing. This portion
of the Census of Manufactures, 1967 provides a data catalog on the
water use characteristics of 9402 manufacturing establishments that
reported the intake of 20 million gallons or more of water in 1967,
and responded to a detailed questionnaire on their water utilization
for the year 1968.
There are significant problems in making use of those data. Every effort
is made by the Bureau of Census to avoid the possibility of disclosing
information about any respondent, thus the data are aggregated to a
degree that makes it impossible to determine directly any but the
grossest distributional characteristics of the population presented.
Further, the information tends to reflect an emphasis on water as an
industrial resource rather than an environmental contaminant. The items
reported are in few cases directly useful to the study of pollution
control. They must be manipulated within a format of assumptions to
yield useful answers for that purpose.
1. The first premise of the model is that the 9402 establishments
that were reported upon in Water Use in Manufacturing are too small a
number to adequately reflect manufacturers' costs.The Census of
Manufacturers» 1967 does not provide any indication of total manufac-
terers1 use of water. However, Water Use in Manufacturing, 1963 did
present such data. (Among other things, it reported a total of 10,580
establishments using 20 million gallons or more of water, of which only
8925 responded to detailed questionnaires, suggesting that the 1967
report may also include a less than complete population of plants using
20 million gallons a year). The sample of 9402 establishments was, then,
expanded on the basis of the 1963 census to include over 14,000 estab-
lishments, that being the greater part of those reported to have an
intake of 10 million gallons or more in 1964. (Ten million gallons,
assuming a normal five day work week, amounts to a discharge of less
than 40,000 gallons per day, or about as much as the sewage from a
town of 600 persons - well below the threshold at which sewering is
necessary under any but the most unfortunate soil conditions).
2. Having determined that the model should be expanded to include
those manufacturing plants that use approximately 10 million gallons or
more of water a year, the modellers accepted the premise that waste
characteristics have a significant relationship to waste treatment
costs. Industrial categories reported in Water Use in Manufacturing,
1967 were then regrouped into subgroups according to the kinds
ancTconcentrations of waste products that were considered to be
T03
-------
characteristic of various industrial processes on the basis of an
extensive literature search. The 320 four-digit SIC groupings
reported by the Bureau of Census emerged, when reassembled, as 71
components, with a generalized waste treatment configuration
established for eachJ The decision rules applied in determining the
configuration were:
a. Standardized treatment procedures were to be applied in
every case, and where modifications peculiar to a plant or any industry
were reported in the technical literature, the modification was rendered
in terms of a similar standard solution to the engineering problem.
(The effect of the rule is to increase calculated costs,
in that modifications reported generally relate to a means to reduce
costs at an equal or greater treatment efficiency through adaptation
to specific conditions.)
(The decision rule was breached for two industry components.
In the pulp and paper industry, SIC 26, sulfite waste liquors do not
seem adaptable to any of the standard waste treatment procedures. In
their case, evaporation and burning prior to treatment of condensates
was assigned as an element of the treatment series. In the case of
primary non-ferrous metals, SIC 333, the "red mud" wasted in aluminum
reduction did not appear to be amenable to any of the standardized
waste treatment methods, so evaporation of the liquid component of the
slurry was assigned as an element of the treatment series.)
b. No treatment method, or sequence of treatment methods,
drawn from the technical literature was to be applied unless it was
associated with a reduction of 90 percent or more of the pollutional
aspects of wastewater that it was intended to remedy.
c. All treatment sequences and other system components were
to embody the highes.t cost standard methods; and when there was uncer-
tainty as to what portion of the waste stream was to undergo a given
treatment procedure, then the larger possible component—up to the
total waste stream—was to be assigned to that procedure.
3. Having established a study population—establishments with
an intake of 10 million gallons or more of water, distributed through
waste and product grouped industrial categories--!'t was necessary to
define the population in terms of size distribution and locational
characteristics. The census data do not include such information,
so they were disaggregated on the premise that the largest water-
using establishments in each of the 320 SIC categories are identical
with the largest users of labor in each category.
Thanks are due to Messrs. Ralph Scott, John Fairall, James Horn,
Leon Myers, and Kirk Willard who took time from extremely busy schedules
to review the technical aspects of the model and who contributed enor-
mously to such merits as it may have.
104
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Since employment data is as protected by Federal sources as water use
data, Dun & Bradstreet files were used to establish distributional
characteristics. From the firm's computerized catalog of manufacturers,
number
was
created. These, with listed employment, are the building block of the
model.
4. With location and size distributions of the model components
approximated on the basis of the employment surrogate, employment data
were translated into hydraulic terms with the use of annual water intake
per employee factors derived from Water Use in Manufacturing, 1967.
Unfortunately, Census data are not sufficiently detailed to conduct an
analysis of water use per employee by location at more than the two
digit SIC level of detail, and all available studies of industrial water
use indicate that location is equally— if not more— important a determi-
nant of water use as industrial type. To accommodate locational factors,
a multiplier was applied to the intake per employee factor, representing
the ratio of intake per employee in each of 17 water use regions (desig-
nated by the Bureau of Census) to national water use per employee at the
2 digit SIC level. Wasteflow for each of 14,449 modeled establishments
was, then, a construct of the formula:
Qa = E . Q1 . Qr
Where: Qa = annual wasteflow
E = establishment employment, reported by Dun & Brad-
street
g. = water discharge per employee, nationally for each
1 of 320 four digit industry categories
Qr = ratio of regional to national water use per
employee in 15 major (2-digit) industry categories
Because was tef lows on an annual basis are of slight significance to
design of abatement facilities, annual discharges were further modified
by establishing a general divisor for each industry, based on an assess-
ment of average number of working days in the operating year. (Q = Qa
Where d = estimated days in working year).
5. Segregation of was tef lows was accommodated at two levels. Census
data are reported for purpose of intake— cooling, process, sanitary, boiler
feed, and other— and for gross water used, including recirculation, rather
than for discharge after type of use. In 1968, for example, less than
105
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28 percent of manufacturers' gross water intake was for process use
and 66 percent was for cooling, thus potentially uncontaminated except
by heat. Yet it is known that some recycling involves diversion of
used cooling waters to process streams, and some cooling involves direct
contact with products in process—as in ferrous metallurgy. The modelers
were, then, faced with a situation that can be defined only in the very
general sense that wastewater requiring treatment is something greater
than process water intake, and something less than total discharge.
For the purposes of the model, then, wastewater requiring treatment
was defined to be:
Qd = (Qp ) + 30 E
Where Q^ = design flow for treatment system
U = total water use, including recycling
I = total intake
Qp = process intake
E = employment (i.e. 30 gallons per employee per day for
sanitary purpose)
The consequence of the procedure is to establish each factory's treatable
discharge in terms that stipulate that recycling of process water is
equivalent in degree to total recycle for the industry, with all process
recycling accomplished by bringing cooling water into the process stream.
Adhering to assumption 2.c, the procedure probably overstates considerably
the amount of water requiring treatment. (And, in fact, it was necessary
in calculation to set constraints that limited treatable discharge
for any component to the amount of its total discharge.)
The values for daily wasteflow requiring treatment were then multiplied
by factors intended to give effect to (a) proportion of treatable waste-
water requiring a given method of treatment, (b) costs based on flow to
cost relationships for construction and operation of the given
normal waste strength? and, (c) a factor intended to provide an
Strengths were gauged in terms of concentration multiples (e.g.
BOD5 400 MG/L = 1), and the multiple became a simple multiplier of flow
to be treated (e.g. BODs 400-800 MG/L = 2). Economies of scale were, how-
ever, taken into account at a level slightly more conservative than the
six-tenths power rule, so:
If Multiplier is: Treatable Where Flow 0.6
Flow is Would Be
1 11
2 1.6 1.5
3 2.2 1.9
4 2.8 2.3
106
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approximation of non-recurring installation cost imposed by land purchase,
repiping, and production losses ranging from .2 to .35 times construction
cost, depending on the complexity of the hydraulic engineering character-
istic of an industry. The sums of individual factory component are
able according to SIC grouping (one to four digit), location (county,
State, water use region, nation), or waste treatment process. Substi-
tution of alternative flow, treatment, and cost variables allows
assessment of impact of policy or technological changes at any level
from a single factory to all manufacturing.
Table 24, Chapter III, Part I, presents the elements of the basic industry
matrix utilized in the model. Table A presents the cost-to-flow equations
and examples of costs associated with selected flow values.
Mater Use in Manufacturing, 1967 also provided the information upon which
current capitalization estimates were based. The document reports number
of plants and volume of flow in a variety of treatment categories for
industrial sectors, On the basis of previously established operating
rates and the same set of cost functions used to determine requirements,
existing facilities were evaluated in terms of average daily flows through
facilities of specified types.
It should be noted that—quite apart from distortions involved in assess-
ments at the mean—the procedure significantly understates the degree of
required capital that is currently available in many industries. In
addition to facilities operated by plants using less than 20 million
gallons, wastes discharged to public sewers and treated by public sewage
treatment facilities are not accounted for; and in a number of cases,
governmental bodies, through the normal sewage handling systems, accepted
a major part of an industry's discharge. Nor can wastes discharged to
land (septic tanks, irrigation, deep-well disposal) be accounted for in
financial terms. In either case, the Bureau of Census simply does not
provide sufficient information to permit an evaluation-^
A possible offset to this understatement has been suggested by a
number of industrial sources who have stated quite freely that much of
the treatment capital currently available is under-designed and has been
under-maintained. Its operational utility may be considerably less than
its current replacement value would suggest.
107
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TACLE A
o
OS
TREATMENT PROCESSES
CC- CAPITAL COST
Oil- OPERATIO;! d MAINTENANCE COST
CC OIL SEPARATION
OM OIL SEPARATION
CC EQUALIZATION
QM EQUALIZATION
CC COAGULATION-SEDIMENTATION
OM COAGULATION SEDIMENTATION
CC NEUTRALIZATION
OM NEUTRALIZATION
CC FLOTATION
OM FLOTATION
CC SEDIMENTATION
OM SEDIMENTATION
CC AERATION
OM AERATION
CC BIOLOGICAL OXIDATION
OM BIOLOGICAL OXIDATION
CC CilLORINATION
Oil CHLORINATIOU
CC EVAPORATION
OH EVAPORATION
CC INCINERATION
OM INCINERATION
COST TO FLQ!i RELATIONSHIPS,
DAS 1C U'ASTE TREATMENT PROCESSES
COST COEFFICIENTS
LOG(COST) = A+LOG(FLOU)(B+LOG(FLO:/))
ADC
4.74702
0.64345
4.62325
-0.30103
5.52401
O.C6923
4.69897
0.24304
4.59106
0.64345
5.45089
0.64345
4.54407
-0.30103
5.07555
0.09934
4.17609
0.24304
6.11227
-0.7112
5.83373
1.57978
0.92844
-0.17671
0.74646
-0.51016
0.61843
-0.11755
0.9G563
-0.100Q3
0.44964
-0.17671
0.55368
-0.17671
0.23408
-0.51016
0.643000
-0.36057
0.66317
-0.10083
1.0000
-0.24314
0.64339
-0.37205
0.221DO
0.0
-0.22353
0.16646
0.00842
0.00586
-0.52716
0.0
-0.02743
0.0
0.0
0.0
0.0
0.06646
0.0
0.07379
0.0
0.0
0.0
0.0
0.0
0.0
COST IN DOLLARS
FLO'.IS IN MILLION GALLONS PER DAY
0.10
1.0
10.0
100.0
10976.
2313.
7529.
660.
"82035.
3441 .
51G8.
772.
13349.
2313.
79824.
2313.
20416.
660.
27073.
1209.
3257.
772.
129500.
520.
155002.
31325.
55 349.
15399.
42010.
1750.
334202.
25399.
50000.
6125.
38999.
15399.
282416.
15399.
35000.
1750.
119000.
4399.
14999.
6125.
1295000.
2971.
631914.
132998.
739514.
102519.
234266.
6299.
1415337.
200266.
483693.
40559 .
109824.
102519.
1010578.
102519.
59999.
6299.
523058.
22994.
69065.
48559 .
12950007.
16974.
2999991.
564674.
31009875.
632492.
1306632.
30800.
6230889.
1590832.
4679182.
384983.
309271 .
682492.
3616179.
6S2492.
102856.
30800.
2299050.
172753.
31 8002.
384983.
129500076.
96976.
13193357.
2397441.
-------
Model Characteristics
The characteristics of the evaluation model can best be appreciated
by a comparison of its aggregated structure with that of the estab-
lishments covered in Water Use in Manufacturing, 1967.
The basic distinction between the evaluation model and its Bureau of
Census source is the expansion to include establishments with an intake
of 10 to 20 million gallons a year. The total number of establishments
covered is increased by this device by more than 50 percent (cf.
Table 21, Chapter III, Part I). But in the case of food processing, wood
products, and leather, an approximate doubling occurs. These industries
tend to be broadly distributed and characterized by moderately-sized
plants rather than a few dominant factories--food processing in
particular, which accounts for 25 percent of the Census-reported
so that a truly significant portion of their pollution associated
features is concealed if only larger plants are considered.
A second distinction between the two data structures is critical to the
assessment of waste treatment requirements. The manner in which an
industry uses water is at least as important to a consideration of its
pollutional characteristics as is the amount of water it uses; and the
distribution of pollutional potential—as measured by calculated treat-
able discharge—varies significantly from the distribution of total
discharge. Pulp and paper production, third in gross water use, becomes
the largest source of treatable wastewater, due to the heavy portion of
the industry's intake for processing. Conversely, petroleum refining
slips behind food processing as a source of treatable wastewater, not so
much as a result of the expansion of the food industry's evaluated
discharge as because of refineries' relatively heavy use of water for
cooling rather than processing. The leather industry—mainly its
tanning component—stands out as the one whose relative significance
is most affected by the modelling procedure. Heavy use of process
water combined with a large relative number of units with an intake of
10 to 20 million gallons a year make the industry's share of waste treat-
ment demand five times as great as its reported share of total water
demand.
The aggregate impact of these distributional features is not great.
Though more than half again as many factories are covered by the
evaluation model as by the report of the Bureau of Census, employment
in industries covered is only increased by 18 percent, and water use
by an even lesser percentage (cf. Table 22, Chapter III, Part I).
However, the logic of the recirculation device employed in the model,
plus the broadening of the population covered, provides a treatable
discharge value that not only exceeds reported process intake for
plants using 20 million gallons by a gross factor of almost 2.4 to
1, but also exceeds total reported intake for the larger users alone
in seven of the fourteen (two digit SIC) industries. It is clear that
109
-------
factories account for the bulk of manufacturers' use of water and for
discharge of pollutants. Water use technology and size distribution of
a number of industries for which water is not so significant a resource
tend to conceal a somewhat larger pollution potential than might be
thought.
(The principal weakness of employment as a water use determinant can
be noted in Table 23, Chapter III, Part II. Employment, and thus calculated
discharge, in transportation equipment [SIC 37] is significantly less
for the evaluation model than for reported users of 20 million gallons
or more. Examination of components derived from Dun & Bradstreet
reports leads to the inference that aircraft factories consigned
to the transportation equipment industry by the Bureau of Census may
have been reported by Dun & Bradstreet in the ordinance category.
The understatement has little influence on aggregate values for manufact-
uring presented in this report. The user should be aware, however,
that in the case of transportation equipment, total costs are probably
under-represented throughout, and by 17 percent or more, if relative
employment is a guide.)
The modelling procedure also affects the interregional distribution of
discharges, and so of costs. Not surprisingly, the Colorado, Great
Basin, and California regions experience a significant increase in
relative dimension when calculated treatable discharge is compared
to reported process intake. In those arid areas, resource constraints
act to hold an atypical proportion of manufacturers below an intake of
20 million gallons a year, and also to promote recycling. In two of
the more humid and less industrialized regions—Southeast and Pacific
Northwest—a substantial increase in treatable discharge, as opposed
to reported total intake, traces to the presence of a larger number
of moderate-sized food processors and a lesser number of wood products
factories that would not be included in an evaluation limited to plants
with an intake of 20 million gallons or more. These five regions,
together with the Western Gulf where the high degree of recycling
characteristic of the petroleum-based industries inflates calculated
treatable discharge, all experience a significant expansion of indicated
waste treatment costs as a result of the procedures employed
(cf. Table 22, Chapter III, Part II).
110
-------
TABLE B
EVALUATION OF INDUSTRIAL
WASTE DISPOSAL PRACTICES, 1968
SIC
20X
201
202
203
204
2046
205 + 7
206
2063
208
209
20
22X
221
222
223
226
22
24
26X
261
262
263
264
265
266
26
28X
2812
2813
2815
2816
2818
2819
282
283
284
285
286
287
289
28
29X
29(1)
30
31 X
3111
32XX
321
324
325
327
329
32
33X
3310
3312
332X
3321
3331
3332 & 3
3334
33
34
35
36
37
39
$l,000's in
Capital
2,247.4
40,490.0
2,358.0
57,800.0
2,691.7
2,202.4
17,857.0
54,270.0
4,914.0
8,997.0
193,827.5
9,633.9
10,851.0
9,051.0
9,590.0
9,635.0
48,760.9
9,652.2
,958.0
64,390.0
271,072.0
180,824.0
5,979.0
4,247.0
529,470.0
3,092.7
13,950.0
247.0
37,882.8
6,848.7
105,361.0
36,803.0
103,220.0
8,427.2
490.8
259.0
2,782.0
10,232.0
13,628.9
343,225.1
—
342,078.5
2,979.0
—
16,972.0
1,807.3
6,191.0
2,120.0
3,170.0
6^759.7
20,048.0
13,878.0
33,384.0
156,635.0
1,379.0
4,074.0
1,790.0
5,202.3
216,342.3
93,614.2
14,779.6
23,849.0
17,358.0
885.0
Place (1967=100)
Annual O&M
150.9
3,344.8
96.6
4,200.0
192.0
137.7
1,492.5
4,229.0
462.8
443.9
14,750.2
582.7
768.0
625.6
771.1
590.9
3,338.3
704.2
370.0
20,510.0
48,873.0
31,003.8
618.8
654.0
102,029.6
256.3
2,247.0
9.5
3,370.2
397.7
11,540.1
2,794.0
11,293.0
463.7
28.3
8.7
148.1
1,034.0
838.2
34,428.8
—
73,217.5
287.3
—
1,704.0
141.7
355.6
145.3
160.5
762.1
1,565.2
1,318.1
2,621.2
32,384.0
66.8
320.8
70.8
265.1
37,046.8
6,151.1
765.2
1,527.0
1,097.6
ill 44'5
O&M Ratio
6.7
8.3
4.1
7.3
7.1
6.3
8.4
7.8
9.4
4.9
7.6
6.0
7.1
6.9
8.0
6.1
6.8
7.3
12.5
31.9
18.0
17.1
10.3
15.4
19.3
8.3
16.1
3.8
8.9
5.8
11.0
7.6
10.9
4.4
5.8
3.4
5.3
10.1
6.2
10.0
—
21.4
9.6
—
10.0
7.8
5.7
6.9
5.1
11.3
7.8
9.5
7.9
20.7
4.8
7.9
4.0
5019
'.1
6.6
5.2
6.4
6.3
5.0
Percent
Discharge to
Sewers &
to Ground
X
70.1%
62.1
47.6
40.2
27.1
37.1
42.6
26.0
55.7
39.2
47.7
60.5
25.6
41.3
26.2
33.5
39.1
9.2
1.1
4.4
6.1
29.8
48.9
14.4
4.6
13.5
4.4
7.5
0.4
2.8
20.8
3.2
18.7
20.1
71.0
4.2
2.1
7.3
6.9
2.6
19.7
—
69.6
(326) 55.0
(322) 35.0
6.6
6.4
60.0
9.3
25.9
15.1
2.8
2.5
40.4
43.0
37.4
9.8
5.2
4.2
64.7
25.7
65.8
28.3
43.8
-------
PLANNED CONSTRUCTION OF MUNICIPAL WASTE TREATMENT FACILITIES
Introduction
The purpose of this part of the report is to:
- present results of the 1971 survey of planned construction
activities for the period FY 1972 through FY 1976,
- present an estimate of planned construction activity derived
by the facilities evaluation model,
- compare the 1970 and the 1971 surveys,
- compare the model and the survey approaches,
- consider how the construction industry capacity might bear
on the interpretation of the two estimates for 1971,
- summarize other findings of the 1971 survey with regard to
federal/State requirements, type of facilities, user charges,
and employee requirements,
- and, finally summarize the program accomplishments in the
municipal treatment sector.
113
-------
Survey of Planned Construction for Municipal
Waste Treatment Facilities
The 1971 survey was conducted to update EPA estimates of the scope and
cost of construction of municipal waste treatment facilities, planned
through FY 1976, which communities intend to install to meet current
water quality standards implementation schedules or other current stan-
dards or enforcement requirements.
The survey was directed to 2294 municipalities whose population was
greater than 10,000 persons or whose facilities were serving more than
10,000 persons. The response rate was excellent with 95.5 percent of
the survey questionnaires returned (cf. Table 1). The survey details
and instructions are included in Volume II of this report.
Survey Findings
Summaries and analysis of the various elements of data obtained through
the survey from the 2300 cities contacted are presented below.
The estimated total cost of constructing planned waste treatment facili-
ties for the five-year period FY 1972 through FY 1976 for municipalities
of or serving 10,000 or more persons is just over $14.0 billion. This
estimate is based on 1971 construction costs of treatment plants, out-
falls, interceptors, and pumping stations. When the construction activity
for communities less than 10,000 is included, $18.1 billion in projects
is planned over the period FY 1972 through FY 1976. These intentions
for FY 1972 through FY 1976 are as follows:
FY $ Billion
1972 5.28
1973-1974 9.28
1975-1976 3.52
Total 18.08
Table 2 presents a summary of'the survey portion of the $18.1 billion
estimate. The State-by-State summary of the FY 1972 through FY 1976
intentions shown above is presented in Table 3.
The survey provides an assessment of intended State activities. In re-
cording recognized improvements, individual communities tend to be optimis-
tic in the amount of construction activity that will take place so that the
collective expectations of local communities may be greater than the ability
of the construction sector to supply these needed facilities. In later
years the figures could be less accurate because many communities do not
yet have detailed plans and specifications for these facilities.
114
-------
TABLE'1
SUMMARY OF SURVEY RESPONSES
Number of
Municipalities
Contacted
TOTALS
REGION- I
Connecticut
Maine
Massachusetts
New Hampshire
Rhode Island
Vermont
RBSIOH II
Hew Jersey
Hew York
Puerto Rico
2294
174
48
r
85
-7
13
4
204
IU3
100
1
Number of
Responses
2191
174
4B
I/
85
7
13
4
187
yj
93
1
Percent
Response
95.5
100.0
IUU.U
100.0
100.0
100.0
100.0
100.0
91.6
yu.2
93.0
100.0
Number of
Responses
Indicating
Needs
1435
82
20
n
38
7
6
0
119
b'3
65
1
Virgin Islands
REGION III
Delaware
Maryland
Pennsylvania
Virginia
West Virginia
Dist.of Columbia
REGION IV
Alabama
Florida
Georgia
Kentucky
Mississippi
Horth Carolina
South Carolina
Tennessee
REGION V
Illinois
Indiana
Michigan
Minnesota
Ohio
Wisconsin
REGION VI
Arkansas
Louisiana
New Mexico
Oklahoma
Texas
REGION VII
Iowa
Kansas
Missouri
Nebraska
REGION VIII
Colorado
Montana
North Dakota
South Dakota
TU...IM
-Wyoming
REGION EC
Arizona
California
Hawaii
Nevada
302
2
21
215
44
19
1
323
ay
Bb
41
30
28
41
29
30
579
144
57
135
45
153
45
239
23
32
15
29
140
105
25
41
27
12
80
'
10
9
8
21
5
193
H
174
8
6
288
I
21
201
44
19
T
317
39
bt>
41
25
28
41
29
29
579
144
57
135
45
153
45
214
21
28
14
28
123
84
19
29
24
12
80
Z/
10
9
8
Zl
5
175
4
156
8
6
95.3
100.0
100.0
93.4
100.0
100.0
100.0
98.1
100. U
IUO.O
100.0
83.3
100.0
100.0
100.0
96.6
100.0
100.0
100.0
100.0
100.0
100.0
100.0
89.5
91.3
87.5
93.3
96.5
87.8
80.0
76.0
70.7
88.8
100.0
100.0
IUO.U
100.0
100.0
100.0
100.0
100.0
90.6
IUU.U
89.6
100.0
100.0
190
2
18
120
33
16
1
247
26
71
27
19
23
29
24
28
321
68
42
59
15
106
31
174
19
23
13
25
94
57
14
19
15
9
50
r
8
8
6
126
•
107
8
6
American Samoa — II — II
Tr. Terr. of Pac.Islds.
Wake Island
REGION X
Alaska
Idaho
Oregon
Washington
—
1
95
2
11
— 34
48
—
1
93
c.
1
34
46
—
100.0
97.8
TOO
100.0
100.0
95.8
69
26
31
115
December 1971
-------
TABLE 2
ESTIMATED COST OF CONSTRUCTION OF PLANNED MUNICIPAL WASTE TREATMENT
FACILITIES FOR MUNICIPALITIES WITH OR SERVING POPULATIONS OF 10,000 OR MORE,
FOR PERIOD FY 1972-1976, BASED ON SURVEY COMPLETED IN DECEMBER 1971.
TOTMB 14.014.5
Alabama
Alaska
Arizona
Arkansas
OB,] 1 fnr-nlH
Colorado
Connecticut
Delaware
Dist. of Columbia
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
Guam
Puerto Rico
Virgin Islands
68.1
12.3
14.0
49.8
1,743.2
62.3
148.9
48.9
108.7
556.8
106.5
60.7
23.4
1,113.0
476.7
173.0
44.9
115.6
89.8
62.3
668.3
495.6
1,166.1
260.4
31.7
255.2
22.2
88.4
40.9
89.7
1,249.6
18.5
1,272.8
101.9
4.1
909.6
86.3
120.0
516.7
36.2
98.1
6.6
158.9
389.8
26.0
0
308.9
153.4
34.0
176.5
.9
3.0
145.3
0
December 1971
116
-------
TABLE 3
SURVEY RESULTS OF ESTIMATED CONSTRUCTION COST OF SEWAGE TREATMENT FACILITIES
PLANNED FOR THE PERIOD FY 1972-1976
(Millions of 1971 Dollars)
TOTALS
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Dist. of Columbia
ELorida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Ehode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
framing
Guam
Puerto Rico
Virgin Islands
FY-1972
5,278.2
33.5
4.1
10.7
12.5
280.4
23.3
96.2
7.8
62.7
313.0
36.3
15.0
15.7
336.7
161 .3
16.8
19.8
46.8
68.5
25.4
201.5
206.5
331.8
142.3
32.5
9.2
13.7
1.8
.4
21.3
461.9
17.8
1,047.1
36.6
1.4
277.2
14.4
41.5
187.2
9.9
31.2
9.3
120.6
127.5
14.5
5.3
loo.o
38.1
38.2
135.1
1.5
2.2
4.2
8.0
FY-19731
6,080.0
9.6
26.4
8.9
27.7
930.9
14.4
95.1
8.8
40.9
125.7
89.6
28.5
8.6
332.5
207.2
78.8
28.8
35.0
40.6
100.5
204.0
190.8
523.2
112.1
17.4
160.0
2.7
28.7
30.7
36.9
554.4
12.8
422.4
66.5
3.7
250.3
24.2
72.3
343.3
35.6
29.5
1.7
31.0
165.5
3.5
13.5
243.3
67.8
32.5
97.2
2.4
10.5
48.6
2.5
FY-19741
3,198.2
9.5
2.3
— —
11.3
218.4
8.4
53.5
79.0
—
89.4
15.8
4.6
7.4
240.8
121.7
72.7
5.9
14.3
28.2
15.0
214.6
149.9
307.3
41.5
7.4
71.9
7.8
23.5
10.8
62.8
105.6
.1
140.8
31.3
1.7
313.3
28.5
9.9
259.0
25.7
33.3
2.8
17.4
110.3
2.5
13.5
81.1
23.8
2.1
21.3
--
76.0
2.5
FY-1975
2,236.5
7.9
7.5
6.2
10.0
369.0
30.0
2.5
_.
106.3
._
24.1
.3
382.9
22.1
21.8
3.2
39.5
17.7
35.4
15.7
80.0
100.4
30.8
14.5
38.1
—
24.1
1.3
58.5
299.6
102.0
18.2
--
62.7
8.1
13.0
105.8
18.8
3.3
11.9
34.4
1.4
6.3
11.0
52.6
23.0
6.6
--
4.1
.8
3.1
FY-1976
1,289.3
5.1
__
1.4
340.8
6.1
5.6
17.0
12.6
„_
.4
38.7
27.6
7.2
11.6
27.1
.1
25.0
36.6
—
130.0
12.9
18.2
27.4
3.0
15.7
__
10.5
6.3
167.2
1.1
,3
156.8
39.8
12.6
1,2
17.8
-9
7.8
11.5
5,5
3.7
61.5
5.8
--
3.9
—
.7
.5
3.8
Total
18,082.2
65.6
40.3
27 2
61.5
2.139.5
82.2
244.8
103.7
103.6
651.4
154.3
72.2
32 4
1.331.6
539.9
197.3
69.3
162.7
155.1
201.3
672.4
627.2
1.392.7
339.6
90. n
306.6
27.2
93.8
43.2
190.0
1.427.8
30.7
1.879.5
153.7
7.1
1.060.3
115,0
149.3
896.5
71.2
130.6
18.0
188.7
449.2
27.4
42.3
496.9
188.1
95.8
264.1
3.9
17.5-
130.1
19.9
Separate costs for FY "1973 and FY 1974 estimated from FY 1972/1974 total.
117
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PLANNED INVESTMENT AS DERIVED FROM THE MUNICIPAL WASTE TREATMENT
FACILITIES EVALUATION MODEL
Introduction
This section reports the results of the Waste Treatment Facilities
Evaluation model as applied to the current (1971) Municipal Waste
Inventory. The model calculates the value of recognized improvement
needs (backlog) and the replacement value of capital in place. This
part briefly states how the model is constructed. A full explanation
can be found in The Economics of Clean Water, Volume I, 1970.
The results of the model are then used in an investment scheduling
procedure which calculates the level of investment required to obtain
the level of treatment of public wastes that have been determined by
the States to match in general water quality objectives. Finally, the
various elements of the investment requirements are also compared to
the results obtained in 1969 when a similar model evaluated capital
values and investment needs for 1968.
118
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Waste Treatment Facilities Evaluation Model
This model is a mathematical simulation of investment in public waste
handling systems. The model facilitates the calculation of the value
of recognized improvements needed in the treatment or operation of
waste treatment systems as stated in the Municipal Waste Inventory.
It is designed to answer questions regarding the current amount of recog-
nized waste treatment needs or backlog.
The model correlates a series of equations that define size (as per capita
design flow) to cost (in constant 1957-59 dollars) relationships for
basic waste-handling procedures and equipment. Such cost functions are
found in papers by Robert Michel 1 and Robert Smith.2 The model scans the .
Municipal Waste Inventory for any needs recorded. All community and/or
municipal waste facilities are entered into the inventory where either:
(a) an operational facility, with or without additional abatement needs,
is in place; or (b) the need for a facility has been identified where
none now exists. (Excluded are unsewered communities and dwellings.)
The model calculates the average cost of installing or constructing the
particular facilities—sized according to a normal statistical distribu-
tion of capacity to indicated load for existing plants in the same State.
The costs are stated in terms of constant dollars. (Sewer and Sewage
Treatment Plant Construction Cost Indices, supplied by EPA, may be applied
to modify price levels.) This procedure supplies the value of recognized
improvements needed in waste treatment or operation of waste treatment
systems.
The second part of this modeling technique is a calculation of the cur-
rent replacement value of facilities in place. The current replacement
value was calculated on the basis of costs experienced in building facili-
ties with similar design flow and removal efficiencies.
Table 4 presents these two values calculated for each State and compares
the figures with a similar calculation done in 1969. The figures are in
September 1969 dollars and June 1971 dollars. The figures for 1969
inflated to June 1971 prices by the Sewage Treatment Cost Index are also
indicated.
The differences in existing facilities nationally between the years
1968 and 1971 are presented in Table 5 and are reflected in the two
figures for the value of capital in place ($12,392.0 and $18,875.0
million in current dollars and $9,421.7 and $11,636.5 million in constant
1957-59 dollars).
Construction Cost of Municipal Wastewater Plants (1967-1969),
September, 1969.
?Cost of Conventional and Avanced Treatment of Wastewaters, 1968.
119
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TABLE 4
EVALUATION OF CAPITAL IN PLACE AND OF DEFINED NEEDS
Value of Works in Place ($000,000)
Value of Needed Works
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Dist. of Columbia
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
Guam
Puerto Rico
Virgin Islands
TOTAL
TOTAL
1968
191.8
l.b
-------
TABLE 5
PATTERN OF EXISTING FACILITIES
Number of Plants
Per Treatment Level
Primary
Intermediate
Secondary
Tertiary
TOTAL
Construction Cost
Per mgd of Capacity
Primary
Intermediate
Secondary
Tertiary
1968 1971
2384 21 1 9
75 8
9951 10,154
10 100
12,420 12,381
1969
380,700
380,700
654,480
1,308,960
Percent of
Total Plants 1969
19.1
.6
80.2
.1
100.0
Current Dollars
1971
476,471
682,033
748,740
925,713
1971
17.0
0.2
82.2
0.8
100.0
121
-------
Elements of the Investment Requirement
Table 6 summarizes the computed value associated with the various
categories of investment needs, as these were listed in the (1971)
Municipal Waste Inventory and assessed by the evaluation model.
The various categories are:
New Plants: preliminary treatment, primary, secondary,
tertiary, and lagoons.
Upgrading: same as for new plants while treatment level
is the one achieved, i.e. treatment level changes
Other Improvements: modification of existing treatment; addition
of nutrient removal processes; addition of
color, odor, or taste removal processes;
deep ocean outfalls.
The largest categories of investment needs are for upgrading the level
of existing treatment and enlargement of an existing plant. Together
they constitute $3443.73 million of the total backlog value and about
3100 individual projects.
A comparison of these figures with those obtained in 1969 (cf. Table 6)
shows that there has been a shift away from a need for new plants. Where-
as in 1969, 40.2 percent of the backlog value was found in costs of
building new plants and 54.3 percent for upgrading or enlarging existing
facilities, the recent calculations for 1971 show only 5.1 percent for
new plants and an increase to 67.7 percent for upgrading or enlargement.
The other three categories have also increased as a percentage of the
total.
The actual number of different recognized improvement needs in the cate-
gories of Table 6 has decreased while the number of systems expressing
those needs has increased from 13,849 in 1968 to 15,012 in 1971. This
information is presented in Table 7 along with comparisons of popula-
tion served by those communities having needs over time.
Alternative Investment Schedules
For the immediate future the evaluation model can determine the level
of investment required nationally to obtain the level of public waste
treatment which is needed to meet general water quality objectives.
The approximate rate at which investment requirements are accumulating
and the amount of the current accumulation of need are known. Thus,
122
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TABLE 6
COMPUTED VALUES FOR VARIOUS CATEGORIES OF NEEDS OVER TIME
(millions of current dollars)
Need
New Plants
Upgrading
Enl argement
Disinfection
Connection to An
Existing System
Other Improvements
TOTAL
1969
1775.00
1332.62
1067.50
27.68
198.28
16.01
4417.55
Percent Of
Total
40.2
30.2
24-1
0.6
4.5
0.3
100.0
1971
257.66
1745.67
1698.06
467.37
396.48
515.80
5081.04
Percent Of
Total
5.1
34.3
33.4
9.2
7.8
10.1
100.0
123
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ro
TABLE 7
INCREASE IN DEFINED WASTE TREATMENT NEEDS OVER TIME
Kind of Need
New Facilities1
Major Upgrading
Minor Upgrading^
Total No. Needs
Total Systems
Percent With Needs
1957
3579
1441
370
5,390
10,511
51.3
Number
1962
3311
3071
374
5,045
11,006
45.8
of Systems
1968
2334
3133
932
6,399 .
13,849
46.2
1971
2821
2564
297
5,682
15,012
37.8
Population Served (000 's)
1957 1962 1968 1971
41,770.3 51,763.3 80,330.6 55,262.3
98,361.9 118,371.9 139,726.7 176,658.9
42.5 43.7 57.5 31.2
Plant, replacement, connection
^Enlargement, additional treatment
3Chlorination, modification
-------
a projection procedure is utilized to find the annual rate of invest-
ment that will sustain existing physical capital, meet expansion
requirements, minimize price increases, and eliminate the accumulation
of investment requirements that currently exists (backlog).
The procedure used takes into account both the existing capital stock
and the following variables which constitute elements of the invest-
ment activity—i .e., growth, recapitalization, and the backlog of
accumulated demands. The procedure also assumes a constant rate of
inflation in construction costs and a constant rate of growth.
Recapitalization, capital in place, and backlog are derivatives of invest-
ment. Recapitalization is calculated as 2.9 percent of capital in place
in any year. Growth needs are calculated to amount in any year to 3.3
percent of capital in place. To the extent that the investment covered
growth requirements, the value is transferred to capital in place.
Values exceeding available investment are added to the backlog of unmet
needs. The backlog itself is reduced by any amount that available
investments exceed recapitalization and growth elements, or increased
as prior demands on a hypothesized investment exceed the amount of
available investment.
Investment Schedules
Using the figures for value of backlog as $5081 million and for value
of capital in place as $18,875 million obtained from the evaluation
model, this procedure indicates that a $2870.9 million annual outlay
is required to reduce accumulated needs within a five-year period in
which inflation compounds at 7.5 percent annually.
The 1970 rate of inflation in the construction sector was 15 percent; how-
ever, administration efforts to control inflation should bring the rate of
price increases in this sector nearer to the historical rate for 1968-1971,
which is approximately 7.5 percent and would give the following investment
schedule: .
FIVE-YEAR BACKLOG ELIMINATION SCHEDULE AT 7.5 PERCENT INFLATION
"Backlog" At
Year Year End Growth Recapitalization Investment
1971
1972
1973
1974
1975
1976
5081 .0
3871.2
2740.9
1706.1
784.9
0.0
Total Investment
"Backlog"
Growth
Recapitalization
691
768
853
947
1051
.7
.1
.0
.2
.8
, 1972-1976
125
588
682
777
874
972
14
6
4
3
.4
.2
.6
.6
.9
,354
,147
*k •• v
,311
,895
.5
.0
.7
2870
2870
2870
2870
2870
.9
.9
.9
.9
.9
-------
Thus the investment scheduling procedure shows that if this inflation
is held down, the total amount of the investment required to eliminate
accumulated needs within the next five years would be $14.3 billion.
The breakdown by State is shown in Table 8.
126
-------
TABLE 8
MODEL INVESTMENT SCHEDULE
INVESTMENT NEEDED TO REDUCE BACKLOG
BY 1976
(Millions of 1971 Dollars)
TOTALS
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Dist. of Columbia
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
Hew Hampshire
Hew Jersey
Hew Mexico
Hew York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
(Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
Guam
Puerto Rico
Virgin Islands
14,354.5
201.0
28.7
86.1
100.5
1.550.3
258.4
71.8
14.4
215.3
R02.4
387.6
43.1
86.1
488.1
617.2
172.3
215.3
143.5
129.2
43.1
272.7
143.5
760.8
373.2
114.8
258.4
57.4
100.5
43.1
28.7
229.7
86.1
1.004.8
258.4
57.4
890.0
IRfi.fi
186.6
631.6
43.1
143.5
?8.7
244.0
1.205.8
129.2
28.7
330.1
315.fi
114.8
502.4 . ...
2R.7
201.0
127
-------
COMPARISON OF THE 1970 AND THE 1971
ESTIMATES OF PLANNED CONSTRUCTION ACTIVITY
Comparison of Surveys
The 1970's survey projected an estimate of $12.6 billion for planned
construction activity (cf. Table 9) in the municipal waste treatment
area. The period covered in the 1970 survey was from December, 1970
through June, 1974, a total of 43 months. Four hundred and fifty muni-
cipalities were chosen on the basis of having projects of $5 million
or more. The remaining communities were covered by reviewing State
program plants.
The 1971 survey results project an estimate of $18.1 billion. The
difference between the $12.6 billion estimate in 1970 and the $18.1
billion estimate in 1971 comes from various sources. Some of the more
pertinent are:
1. The time period in the most recent survey is longer, FY 1972
through FY 1976 or a total of 60 months versus 43 months in
in the earlier summary.
2. The 15 percent inflation rate in the cost of construction in
the period between the two surveys.
3. The planned projects were formulated by municipalities to meet
water quality standards, which in certain situations may have
become more stringent.
4. The increasing availability of up-to-date engineering estimates
for projects previously assessed in their rudimentary planning
stages. For example, a project which went under construction
in New York City earlier in 1971 was estimated by the designers
to cost about $100 million. The lowest bid received on the pro-
ject was about $229 million. Experiences such as these have
prompted many communities to update their cost estimates.
5. More comprehensive assessing and reporting; 2300 communities in
1971 as opposed to 450 in 1970.
6. Acceleration of construction schedules. The State of California
has advised its communities that the State's Clean Water Grant
Program is for a five-year period only. All required pollution
control facilities are to be initiated prior to the termination
of the program or they will not receive State assistance. This
required the San Francisco Bay Area, for example, to condense its
thirty-year program into five.
7. The necessity of municipalities meeting water quality standards
and related implementation plans within the next five years.
The enforcement of these requirements is undoubtedly a factor
in the shaping of imminent needs and their associated costs.
128
-------
TABLE 9
ESTIMATED COST OF CONSTRUCTION OF MUNICIPAL SEWAGE TREATMENT WORKS
FOR THE PERIOD DECEMBER 1970 THROUGH JUNE 1974
($ MILLION)
TOTALS
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Dist.of Columbia
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Okl Rhrnrn.
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
Guam
Puerto Rico
Virgin Islands
$ 12,565.2
27.0
28.1
51.0
42.0
737.5
47.4
229.5
62.0
347.2
444.2
74.0
50.8
14.5
1,043.6
174.8
111.9
52.7
117.0
132.7
157.4
349.7
422.6
788.8
295.2
34.1
268.2
31.4
49.0
47.2
137.8
1,308.7
19.6
1,721.0
125.3
8.4
733.5
69.8
78.6
616.4
37.7
57.6
13.5
88.9
398.7
22.6
38.0
280.1
216.3
51.4
190.8
1.7
9.7
93.0
14.6
December 1970
129
-------
8. The rise in the number of tertiary treatment facilities required
to meet water quality standards.
In the past ten years the surveys which were done to assess "needs" have no
consistent definition of their objective3 so that a historical comparison
of such "needs" estimates is impossible. A comparison of estimates that
take total investment into account are even more disparate. In the past
three years the "needs" estimate has risen from $10.2 billion to $18.1
billion. Adding the latest survey estimate and the amount of projects
funded ($6.3 billion) in the period between the two surveys gives $24.4
or a 139 percent increase in these three years (cf. Table 10).
Comparison of the Model with Survey Results
The evaluation model results in an estimate of $14.3 billion needed to be
invested during the period FY 1972-1976 in order to overcome deficiencies
in present facilities and to keep pace with growth, capital replacement,
and inflation. On the other hand, the survey result of $18.1 billion is
an aggregation of State and local estimates of their construction activity
during this same period. The basic differences between the model approach
and the survey approach will be discussed. This will be followed by an
ex post evaluation of model projections» which compares model projections
wfth actual investment activity. Finally, the projections of the model
and the survey will be evaluated in light of potential construction
activity during the FY 1972-1976 period.
Difference Between Model and Survey Approaches
There are several basic methodological differences between the survey and
the model:
1. The model uses statistically derived cost function to calculate
the cost of planned construction activity, whereas the survey
3In 1962 the Conference of State Sanitary Engineers report said $2
billion was needed to "eliminate the backlog of unmet waste treatment
'needs111. In 1966, the JEC State and Local Public Facility Needs and Finan-
cing report, also from State Conference, stated $2.6 billion in "needs".
In 1969, the FWQA survey of State governments produced $10.02 billion. In
1970, an EPA survey of State governments and communities indicated a total
investment need of $12.6 billion. In 1971, the same EPA survey reported
for communities of served population of 10,000 or more $14.0 billion or,
including all communities, the total "needs" reach $18.1 billion. Again
in 1970, the American League of Cities survey reported over $30 billion
in "needs", although the municipalities in this case did not use consistent
reporting requirements and some included costs of facilities other than for
waste treatment needs.
130
-------
TABLE 10
CHANGES IN STATE SEWAGE TREATMENT INVESTMENT NEEDS EXPRESSED
1969-1971 ($ MILLIONS)
TOTALS
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Dist. of Columbia
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
lova
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
Guam
Puerto Rico
Virgin Islands
Needs
Expressed
1969
10,217.1
35.0
SO
3375
651 .8
.0
280.5
28.0
355.0
200.0
150.0
14.4
0.5
437.2
152.6
33.3
61 .0
62.6
I4U.O
140.9
236.9
438.0
253.7
136.3
40.0
390.0
13.5
62.0
28.6
138.0
880.0
9.9
1,900.1
69.3
22.0
432.5
65.3
135.0
432.0
51. S
75.0
27.0
105.5
525.0 ,
11.7
70.0
151.0
160.0
44.3
243.7
12.0
6.2
28.9
lb.4
Projects Funded Needs
Jan. 1, 1969 to Expressed
Oct. 31, 1971 Nov. 1971
6,329.4
67.9
14.8
11.1
18.7
309.4
49.2
232.6
32.1
78.6
180.3
199.4
11.8
10.6
261.9
87.9
53.3
60.8
98.5
61 .2
47.2
163.4
94.3
465.4
99.7
41.0
80.4
14.9
28.8
19.9
46.4
208.8
14.4
1,512.7
110.9
4.5
347.3
74.6
64.2
237.6
n.o
49.1
3.0
89.9
200.1
5.2
15.4
107.8
101.0
10.8
160.7
1.8
6.1
52.7
9.7
18,083.0
65.7
40.3
27.2
61.5
2.139.5
82.2
244.8
103.7
103.6
651.4
154.3
72.2
77.4
1,331.5
538.8
197.3
69.3
162.8
155.0
201.3
672.4
627.2
1,392.6
339.6
90.0
306.5
27.3
93.9
43.1
190.0
1,427.9
30.8
1,879.6
153.7
7.1
1 ,060.4
115.0
149.2
896.5
71.2
130.6
18.1
188.7
449.3
27.4
42.3
497.4
188.1
95.8
264.1
3.9
'.5
130.1
19.9
Gross Change
In Needs
+14,195.3
+ 98.6
+ 43.1
47.7
+ 47.2
+ 1.797.1
1.6
+• 196.9
+ 107.8
172.8
+ 651.4
+ 203.7
+ 69.6
+ 42.5
+ 1,156.2
+ 470.1
+ 217.3
+ 69.1
+ 198.7
+ 76.2
+ 107.6
+ 598.9
+ 283.5
+ 1,604.3
+ 303.0
+ 91.0
3.1
+ 28.7
+ 60.7
+ 34.4
+ 98.4
+ 756.7
+ 38.3
+ 1,492.2
+ 195.3
10.4
+ 975,2
+ 124.3
+ 78.4
+ 702.1
+ 30.7
+ 104.7
5.9
+ 173.1
+ 124.4
+ 20.9
12.3
+ 454.2
+ 129.1
+ 62.3
+ 181.1
6.3
+ 17.4
+ 153.9
+ 14.2
Percent Change
Over 1969
+ 138.9
+ 281.7
+ 359.2
- 55.5
+ 143.0
+ 275.7
1.2
+ 70.2
+ 385.0
- 48.6
+ 315.9
+ 135.8
+ 483.3
+8.500.0
+ 264.5
+ 308.1
+ 652.6
+ 113.3
+ 317.4
+ 54.4
+ 76.4
+ 252.8
+ 64.7
+ 632.4
+ 222.3
+ 227.5
0.8
+ 212.6
+ 97.9
+ 120.3
+ 71.3
+ 85.3
+ 35.3
+ 78.5
+ 281.8
- 47.3
+ 225.5
+ 190.4
+ 58.1
+ 162.5
+ 59.6
+ 139.6
- 21.9
+ 164.1
+ 23.7
+ 178.6
- 17.6
+ 300.8
+ 80.7
+ 140.6
+ 74.3
- 52.5
+ 280.6
+ 532.5
+ 92.2
131
-------
relies on individual communities' knowledge of the cost of
planned facilities. In some communities well-documented and
calculated cost information exist; however, this is not
universally true.
2. The model uses statistically estimated growth and replacement
factors, which determine the construction required to maintain
the nation's capital stock of treatment plants and to provide
treatment for additional population and industrial wastes.
The growth projections obtained by the survey for an individual
community are likely to be overly optimistic when compared to
the growth of all communities. The replacement rate (deprecia-
tion) is difficult to assess for an individual community because
of the lumpiness involved in replacement expenditures.
3. The model also includes a specific inflation factor which adjusts
for price increases in construction activities. As noted in the
survey discussion, State and local intentions are expressed in
1971 dollars.
A primary purpose of the survey is to give -an indication of each local
government's construction plans in the municipal waste treatment sector.
The survey reflects the summation of local activities which, when viewed
in the aggregate, presents an estimate of desired construction activity
which may or may not commence during the period FY 19,72-1976, e.g. com-
pressing of the twenty-year California program into five years. The
purpose of the model is slightly different in that it provides an estimate
of the investment activity between 1972 and 1976 that local governments will
be required to undertake in order to maintain their current growth and
replacement needs and make progress toward constructing those facilities
required to meet water quality standards.
Historical Evaluation of Model Results
One way to assess the model results is to compare these results with
actual past conditions in the municipal waste treatment facilities sec-
tor of economy.
The demand model based on physical capital and structured to reflect the
dynamics of investment provided good post hoc agreement with actual con-
ditions. The "needs" in 1969 were estimated at $3,201 million in constant
dollars (1957-59 = 100). Assuming a growth rate of 3.3 percent in each
year since then:
Growth
($ millions)
1969 416.5
1970 430.4
• 1971 444.5
132
-------
and a replacement rate of existing plants of 3 percent:
t
Replacement
($ millions)
1969 282.7
1970 292.0
1971 307.0
and subtracting those contracts awarded in each year:
Contracts
($ millions)
1969 622.0
1970 766.2
1971 876.0
a "needs" reduction of $91.1 million and a projected 1971 "needs" of
$3,110 million is obtained. This figure compares favorably with the
value $3,132.2 million computed with the model. Also capital in place
in 1968 was $9421.7 million (1957-59 dollars). This value is reduced
by 3 percent annual replacement and increased by the value of contract
awards in each subsequent year, which
Replacement ($ millions) Investment
1969 282.7 622.0
1970 292.0 766.2
1971 307.0 876.0
projects a 1971 capital in place value of $10,804.2 million, as compared
to a computed value of $11,636.5 million.
In sum,this post hoc projection indicates divergence from "needs" within
1 percent and from capital in place within 8 percent, as compared to a
greater than 130 variation percent for the survey.
Construction Supply Capability
The question of the ability of the construction industry for municipal
wastewater facilities to construct the planned investment activity
must be considered in projecting the level of activity in this sector.
The survey projected $5.28 billion of grant awards on FY 1972 and $18.1
for the five-year period FY 1972-1976, while the model on the other hand
projected a need of $14.3 billion with an acreage of $2.8 billion con-
tracted annually. Furthermore, there exists a backlog of $3.4 billion
in grants that have been obligated but are not yet under construction
(cf. Table 11), which must be included in an assessment of construction
activity.
133
-------
TABLE 11
VALUE OF PROJECTS PENDING CONSTRUCTION AND UNDER CONSTRUCTION
AS OF OCTOBER 31, 1971
($ MILLIONS)
TOTALS
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Dist. of Columbia
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Hetiraska
Nevada
New Hampshire
Hew Jersey
Hew Mexico
Hew York
Horth Carolina
Horth Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
Guam
Puerto Rico
Virgin Islands
PENDING
CONSTRUCTION
3,400.3
74.5
10.9
5.5
14.6
117.1
32.7
34.0
24.7
77.8
50.9
94.6
12.4
13.1
137.7
60.4
35.7
46.8
45.1
58.9
25.3
114.8
29.6
328.5
71.0
46.1
40.7
14.1
19.5
12.9
12.5
79.9
10.8
640.9
72.9
3.5
178.2
61.7
9.6
145.3
2.5
_t_
140.7
2.5
8.7
73.1
64.7
28.5
121.1
0.9
6.1
29.7
0.2
UNDER
CONSTRUCTION
4626.9
36.2
'.1
12.3
19.1
229.0
19.3
258.1
16.7
24.4
137.3
157.6
8.3
1.5
163.3
32.0
20.6
13.8
80.7
32.8
34.6
148.8
100.8
178.1
40.0
17.3
108.8
2.3
15.9
7.0
45.4
155.8
5.3
1408.3
50.4
1.3
206.1
32.0
54.5
220.1
23.8
2J2 ~
80.3
94.8
5.3
10.5
75.7
48.8
4.0
49.6
0.9
1.5
39.3
12.8
134
-------
To place the projections of planned activity into perspective, the
recent trends in construction activity, i.e. the lag in starts and
completions, the ability of this sector of the construction industry
to expand, and the inflation experienced in this sector will be
discussed.
Lags
Under present conditions it takes over five years, on the average, to
complete a sewage project. The time lag between when a project is
planned at the State or local level, when a federal grant is obligated,
and when construction begins is widening. In 1957, when federal finan-
cial assistance for sewage construction was initiated, 55 percent of the
value of new starts had been put in place in the same year. But with
each increase in aggregate construction activity, the backlog of works
under construction and works for which funds have been granted by con-
struction has not yet started has increased.
Expansion of Construction Activity
Another limiting force for the supply capability is the phased expansion
of the wastewater facilities construction sector. This construction
sector, like many economic sectors, contains numerous institutional con-
straints which may inhibit the ability to expand to meet the indicated
demand. The recent trends in the expansion of construction activity in
the municipal wastewater sector are shown in Table 12, where the six-
year growth rate in construction activity is slightly over 28 percent
in current dollars or 22 percent in constant dollars. The trend in
recent years has been one of increasing activity; nevertheless to reduce
the backlog and to keep pace with the planned construction activity indi-
cated by the survey would require an unprecedented increase in construc-
tion activity.
If the historical trend in new construction activity in this sector main-
tains this 28 percent growth pattern (cf. Table 12), then Table 13 shows
the projected activity in the next five years to be $18.9 billion. How-
ever, if the inflation rate is held down and the trend is more nearly like
the years 1965 to 1970, then the rate of growth in construction activity
would be 25 percent and projected starts would amount to $17.4 billion.
The survey results state that $18.1 billion in 1971 dollars is planned
in construction activity in the next five years. Add to this the value
of projects pending construction of $3.4 billion, and the survey estimates
that total new starts in construction will be $21.5 billion through 1976.
Table 13 of growth figures indicates that such activity is highly unlikely.
Also the survey states that $5.28 billion is planned for 1972 and $9.28
billion for 1973 to 1974. To accommodate this level of activity the
135
-------
TABLE 12
FEDERALLY-ASSISTED STARTS IN CONSTRUCTION
OF MUNICIPAL WASTE TREATMENT FACILITIES
Percent Increase, Year to Year
Year
1965
1966
1967
1968
1969
1970
1971
Millions
365.0
489.6
397.0
671.0
936.9
1360.7
1700.02
TOTAL 5950.2
Source: Sewer and Sewage
Gross
34.1
-18.9
69.0
39.6
45.2
24.9
Treatment Plant
Inflation1
3.9
2.9
2.8
7.3
7.8
15.0
Construction
Net
30.2
-21.8
66.2
32.3
37.4
9.9
Index,
Environmental Protection Agency.
Twelve-month estimate.
136
-------
TABLE 13
PROJECTED FEDERALLY-ASSISTED STARTS IN CONSTRUCTION
OF MUNICIPAL WASTE TREATMENT FACILITIES
($ Millions)
Year 28 Percent Growth 25 Percent Growth
1971 1700.0 17.00.0
1972 ' 2176.0 2125.0
1973 2788.0 2652.0
1974 3468.0 3315.0
1975 4607.0 4148.0
1976 5848.0 5185.0
Total for: 1972-1976 18,887.0 17,425.0
137
-------
construction industry would be required to nearly double annually or the
build-up in work obligated but not under construction would continue.
On the other hand, the evaluation model estimate of $14.3 billion plus
the $3.4 billion in pending projects adds up to $17.7 billion of planned
construction activity for the next five years. This estimate assumed
7.5 percent inflation during that period and compares favorably with the
historical trend assuming a 25 percent growth rate.
Thus the evaluation model is seen to be a more accurate indicator of
investment needed in the municipal waste treatment area because it corre-
sponds to both what has happened in the past and what might reasonably
be expected to occur in the future. However, the weaknesses of demand
modeling should be noted. It fails to reflect some components of demand
which are not known precisely enough to distinguish qualitative shifts
readily. Such shifts are the ratio of plant costs to ancillary costs;
depreciation rates for interceptors, outfalls, pumping stations; and the
loss of sunk capital through accelerated replacement and inadaptability
of existing plants to higher degrees of treatment. Also, the composition
of the backlog requirements, if not fully reported in the Municipal Waste
Inventory, would also bias the backlog calculation.
Conclusion
An assessment of needs should estimate the investment intentions of
municipalities. In so doing, a precise account of planned construction
activity should be taken so as to exclude expectation of such activities
which have a low probability of actually being initiated. Such an assess-
ment involves a tally of communities' demands, i.e. activities or projects
required to meet environmental regulations and standards. A study of the
supply, i.e. of what the industry is capable of constructing, is also in-
volved. Both demand and supply considerations must be included to obtain
a reliable projection of the necessary monies for investment in this sector.
The preceding analysis demonstrates that the results of the model seems to
accommodate both of these interacting forces of supply and demand, thus the
figure of $14.5 billion is likely to represent planned construction activ-
ity during the FY 1972-1976 period. Next year a complete analysis of both
supply and demand phenomena will be presented.
138
-------
Additional Survey Results for Communities Greater Than 10,000
Relation of Construction to Regulatory Requirements
The responding municipalities were requested to indicate the reason for
planning the construction reported. Table 14 shows, in summary form,
the cost of constructing required facilities and the associated require-
ments to be fulfilled. It should be noted that approximately 83 percent
of the costs are (nearly) equally distributed among three requirements,
because of (a) locally developed plans, (b) State-approved implementation
schedules, and (c) federally-approved water quality standards implemen-
tation plans.
Approximately $220 million in construction is to be initiated because of
more stringent federally-approved water quality standards, and over $2.1
billion in construction is required because of enforcement procedures
and/or State and federal court orders.
Description of Facilities
Table 15 summarizes the survey results of needed facilities for the five-
year period, by description and type. The details are discussed below.
1. New vs. Modified Works
Summaries of the responses on the type of construction
planned indicated that approximately 58 percent of the
expected expenditures are for the construction of new
facilities and 42 percent for modifications and improve-
ments. As shown in Table 15, most of the modifications
are for the purpose of increasing plant capacities and
treatment levels.
2. Plants vs. Ancillary Works
Approximately 53 percent (or $7.4 billion) of the cost of
needed facilities is for the construction of new or improved
plants and 41 percent (or $5.7 billion) is for ancillary works,
such as pumping stations, interceptors, and outfall sewers.
The remaining 6 percent is for projects involving individual
plant elements (e.g. sludge processing and disposal operations
and disinfection) and nutrient removal facilities. Of the
approximately $5.7 billion to be used in the construction of
ancillary works, about $3.7 billion is for interceptor sewers.
3. Level of Treatment .
An examination of the costs associated with the various levels
of treatment indicates that of the estimated $7.4 billion for
the construction of new and improved plant facilities, approxi-
mately 5.5 percent (or $405 million) is for primary treatment
139
-------
TABLE 14
ESTIMATED COST OF CONSTRUCTION IN ACCORDANCE WITH REGULATORY REQUIREMENTS
1,2
Requirements
Locally Developed Plan^
State Approved Implementation Schedule
Federal Approved Water Quality Standards
Implementation Plan
FY '71 More Stringent Federally Approved WQS
Federal Enforcement Procedures or Actions
State Court Order
Federal Court Order
Total
Facilities on which no requirement data submitted
Estimated Cost of Facilities
To Be Constructed
[$ Billion) Percent
3.721 27.0
3.883 28.2
3.799 27.6
.221 1.6
1.251 9.1
.781 5.7
.104 .8
13.760
.254
14.014
Based on survey of needs of municipalities with population of 10,000 or more for period FY-72-76,
2Excludes combined sewer overflow control facilities.
3With few exceptions, most of the projects identified with this requirement are being planned or
developed in conformance with anticipated Federal and State Standards.
December 1971
-------
TABLE 15.
COST SUMMARY OF NEEDED FACILITIES BY DESCRIPTION AND TYPE
($ Million)
1
TYPE
Description
Primary
Intermediate
Secondary
Tertiary
Nutrient Removal
Plant Elements
Ancillary Works
Total s
New
Facility
108.0
4.8
1512.0
665.1
270.6
281.2
5208.0
8049.7
p
Modification
35.5
2.3
231.2
10.8
1.6
126.3
58.0
465.7
Increase
In Capacity
253.3
22.6
731.0
118.3
2.4
69.9
331.0
1528.5
Increase In
Treatment Level
1.0
52.3
876.9
620.6
17.4
31.0
15.2
1614.4
Increase In
Treatment Level
and Capacity
9.0
14.1
1297.5
846.1
33.4
67.6
88.0
2355.7
Total
406.8
96.1
4648.6
2260.9
325.4
576.0
5700.2
14014.0
period FY-1972-76.
2No increase in capacity or treatment.
-------
facilities; 1.3 percent (or $96 million) for the intermediate
levels of treatment; 62.7 percent (or $4.647 billion) for secon-
dary; and 30.5 percent (or $2.26 billion) for tertiary treatment
facilities. Table 14 shows a State-by-State breakdown of needs
for tertiary treatment facilities. It was found that 35 percent
of the cost of tertiary needs are reported in the States of
Illinois (22 percent) and Maryland (13 percent). California,
Florida, Michigan, New York, Ohio, and Virginia each reported
needs of over $100 million,
4. Nutrient Removal—Phosphate and Nitrate
The estimated cost of facilities to be added to existing or
proposed plants for nutrient removal is $325 million. Of this
$148 million is for phosphates and $177 million is for nitrates.
Seventy-five percent of the phosphate removal costs and 45 per-
cent of the nitrate removal costs are projected for municipali-
ties located in the Great Lakes Region. A State-by-state
breakdown of needs is presented in Table 16.
5. Industrial Waste
Responding municipalities were requested to give the percentage
of the effluent which, based on flow, can be attributed to indus-
trial waste. Based on the number of need items, 46 percent
showed no industrial waste component; for 43 percent of the
needs, the percentage of industrial wastes (based on flows)
ranged from one to 30 percent; the remaining 11 percent were
in the 31 percent to 100 percent range. The summary result of
applying the obtained percentages to the cost of projects
involved indicates that approximately $2.17 billion of the
$14.0 billion in construction proposed for municipalities
serving 10,000 or more persons during the next five-year period
is for the purpose of alleviating pollution from industrial
sources.
6. Operation of Proposed Facilities
Expected facility operation dates and associated costs for
the reporting municipalities are summarized in Table 17. In
addition to these, as of November 1, 1971, there were $4.6
billion worth of federally-assisted projects under construction
and another $3.4 billion in the preconstruction stages on which
grant commitments had been made.
User Charges
Table 18 summarizes the responses to the inquiry regarding the method
upon which the user charge is based and the year the present usage rate
was established. Fifty-four percent of the municipalities indicated
"hydraulic volume" as the basis for charging and 17 percent "both
volume and quality". Nearly 29 percent indicated the use of methods
other than those identified in the survey.
142
-------
TABLE 16
ESTIMATED COST OF TERTIARY TREATMENT, NITRATE AND PHOSPHATE REMOVAL FACILITIES
PLANNED FOR CONSTRUCTION DURING FY 1972-1976, BY MUNICIPALITIES
WITH OR SERVING POPULATIONS OF 10,000 OR MORE
($ MILLION)
TOTALS
Tertiary
Treatment
2,260.24
Nitrate Phosphate
Removal Removal
176.79 148.35
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Dlst, of Columbia
Florida
Georgia
14.80
13.46
770
8720
31.68
157.35
37.86
7/.UI - - - -
.bu .BO
Eavaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
497.59
85. Bl
14.65
7.02
11.17
54. // 57.25
3.U6 '14.02
.36
Louisiana
Maine
Maryland
Massachusett s
Michigan
Minnesota
292.66
47.70
112.24
11.64
.55
7.15 22.18
3.14
Mississippi
Missouri
2.83
Montana
Nebraska
7.40
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
6.50
86.89
11.85
108.66
45.12
184.05
37.31
5.27
62.45
7.78 28.24
1.62
3.66 10.20
12.00 4.86
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
5.38
89.56
15.00
124.20
.70
16.54
1.55
10.50 4.24
Gufljn _
Puerto Rico
Virgin Islands
3.0Q
December 1971
143
-------
TABLE 17
EXPECTED YEAR OF OPERATION OF PROJECTS TO BE INITIATED IN
FISCAL YEARS 1972-76 IN MUNICIPALITIES WITH
OR SERVING POPULATIONS OF 10,000 OR MORE
Year Of
Facility Operation
FY-1972
FY-1973
-i
FY-1974
FY-1975
FY-1976
FY-1977
FY-1978 +
Total
Estimated Cost
Of Facilities
($ Millions)
120
1,235
2,932
3,026
3,292
2,152
1,257
14,014
December 1971
144
-------
TABLE 18
NUMBER OF MUNICIPALITIES1, HAVING CONSTRUCTION NEEDS IN THE FY 72-76 PERIOD,
WITH USER CHARGES, -AND THE METHOD UPON WHICH CHARGE BASED AND YEAR RATE ESTABLISHED
Basis of Use Charge
01
Year Rate
Established
Prior to 1941
1941 - 1950
1951 - 1960
1961 - 1965
1966 - 1970
1971
No years indicated
Total
Hydraulic
Vol lime
6
17
148
121
407
150
30
879
Quantity
of BOD
0
0
0
1
2
0
0
3
Quantity
of Solids
0
0
0
0
0
0
0
0
Both BOD
& Solids
0
0
1
1
3
3
0
8
Both Volume
& Quality
•0
3
23
40
118
78
14
276
Other
9
13
56
70
162
83
73
466
1
With or serving populations of 10,000 or more.
December 1971
-------
Additional Employee Requirements
Approximately 12,700 additional employees are reported to be needed in
the municipalities surveyed, as a result of the construction to be
initiated through FY 1976. Of these, 16 percent are for professional
positions, 65 percent for operations and maintenance needs, and the
remaining 19 percent are required to fill administrative support-type
jobs. About 5,700 or 45 percent of the employees will be needed in
FY 1975 and FY 1976. This information is summarized in Table 19. It
is of interest to note that in the March 1972 EPA Manpower Report to
Congress the number of additional employees needed through FY 1976 was
estimated at 13,900. This was based on information from a different
set of sources.
Program Accomplishments in Municipal Waste Treatment Facilities
In evaluating the progress being made in the nation's water pollution
abatement effort it is important to report trends and current levels in
waste production and treatment. The report presents accomplishment data
for the years 1968-1972. The emphasis of this report will be upon the
municipal sector since this is the area in which the greatest amount of
federal activity has been concentrated over the past years.
The data for 1968-1970 was obtained from the General Discharge File main-
tained by the Office of Water Programs. The records for 1971 and 1972 are
based partially on data from the file and projections based on a trend
analysis of existing data. The results of this analysis are included in
Table 20. The table presents accomplishments in terms of population
sewered and increases in wastes treated. The table also indicates the
level of treatment and the decrease in population receiving primary treat-
ment. The percentage of population receiving treatment has not signifi-
cantly increased.
The discussion of program accomplishments will be more extensively analyzed
in the next year's cost study. The extent to which the projected expendi-
tures through 1976 will effect these accomplishment measures will be
analyzed and presented along with action accomplishments for the period."
146
-------
TABLE 19
1
ESTIMATED NUMBER OF EMPLOYEES NEEDED TO MAN FACILITIES, PROPOSED FOR CONSTRUCTION
DURING FY 72-76, AND FISCAL YEAR FACILITIES EXPECTED TO BE OPERATIONAL
Categories of Employment
Fiscal Year
1972
1973
1974
1975
1976
1977
1978
1979
1980 +
Total s
Percent
Professional
51
350
494
461
354
189
75
33
10
2,017
15.9
Operation and
Maintenance
139
1,207
3,323
1,972
1,343
666
371
191
38
8,250
65.1
Other
36
401
687
535
348
225
130
34
13
2,409
19.0
Totals
226
1,958
3,504
2,968
2,045
1,080
576
258
61
12,676
100.0
Percent
1.8
15.5
27.6
23.4
16.1
8.5
4.6
2.0
.5
100.0
1
For municipalities with or serving populations of 10,000 or more.
December 1971
-------
TABLE 20
PROGRAM ACCOMPLISHMENTS
00
Sewered Population
(millions, persons)
Waste Strength
gross wastes treated by
municipal plants
(mi 11 ion/pounds/year BOD's)
Level of Treatment (Percent)
Sewered Population Untreated
Sewered Population Primary
Sewered Population Secondary
Sewered Population Advanced
1968 1969 1970 1971' 1972'
140 144 148 152 156
14,137 14,773 15,438 16,133 16,859
•
77665
31 30 28 25 24
62 63 66 68 70
<1 <1 <1 <1 <2
1
Based upon Historical Growth Trends 1962-1970.
-------
ENVIRONMENTAL AND ECONOMIC BENEFITS AND COSTS
RELATED TO VARIOUS WATER POLLUTION ABATEMENT STRATEGIES1
Attention to the marginal benefits and costs of various treatment levels
is necessary to insure that the water pollution goals sought are defensi-
ble in terms of their net benefit to society. The subsequent analysis of
the marginal costs and benefits to attention levels of treatment suggests:
- Because costs accelerate rapidly as higher levels of treatment are
achieved, the total cost of meeting very high levels of treatment
approaching zero discharge could be many times those required to
meet current water quality standards.
- The improvement in beneficial uses of waters from such expendi-
tures are likely to be modest compared to the costs. All the
pollution parameters of concern have not yet been converted to
water quality standards so that any current estimates are likely
to be low.
- A number of adverse environmental impacts would occur such as
higher energy consumption and solid waste problems.
- Large resources devoted to achieving small increases in water
quality benefits have the effect of withdrawing resources from
other environmental efforts or other national priorities.
Abatement Costs
Rising Marginal Costs
Although control techniques and costs vary greatly by source, there are
basic operational and technical factors which result in similar control
costs curves for most sources. These control costs increase rapidly as
higher levels of control are achieved.
The principle levels of municipal waste treatment are usually described
as:
- secondary treatment which removes 85-90 percent of oxygen-demanding
wastes (BOD) and suspended solids by physical and biological treat-
ment methods;
- chemicals addition to secondary removes 90-95 percent of BOD and
suspended solids along with 80-90 percent of phosphates;
Summary of "Environmental and Economic Benefits and Costs Related
to Various Water Pollution Abatement Strategies", paper prepared by EPA
and CEQ.
149
-------
- tertiary treatment2 which removes 95-99 percent of BOD, suspended
solids and other pollutants, ranging in cost and treatment levels
from two-stage line clarifications, activated carbon adsorption,
to reverse osmosis; and
- zero discharge which removes all pollutants and may be accomplished
by complete distillation or wastewater recycling.
Industrial treatment levels are often described similarly, although'the
types of wastes and abatement levels can be quite different. Also, abate-
ment from industrial wastes and abatement levels can be quite different.
Furthermore, abatement from industrial wastes can in part be accomplished
by production process changes and improved internal management, as well as,
end-of-the-line treatment.
Rising Incremental Costs
Figure 1 is illustrative of cost curves for both municipal and industrial
water pollution control. Because industry has more alternatives which
can be used to achieve pollutant reduction, the curve is not completely
accurate. It is probable that in most industries, the costs of abatement
would be less at the lower levels of reduction because process changes
and better waste management be employed. But at higher levels of control,
additional waste treatment will be required as represented by the cost
curve shown (cf. Figure 1). In other words, the difference between con-
trol costs at high levels over those at lower levels will be greater than
that shown in Figure 1.
These rapidly accelerating costs are illustrated in Table 1. As the table
indicates, the cost of reducing the last increments of pollutants are much
greater than lower levels of treatment. For example, a 10 percent increase
in treatment—from 85 to 95 percent—would raise investment costs by 50 per-
cent; while another 3 percent increase would raise costs by the same amount.
Total Costs
Table 2 illustrates the capital, operating, and annualized costs that
would be incurred during 1971-1981 to achieve levels of effluent reduc-
tions for municipalities.
Table 3 illustrates the cap-ital, operating, and annualized costs that
would be incurred during 1971-1981 to achieve various levels of effluent
reductions for industry.
In some cases, land disposal of liquid effluents may also be used.
This method is approximately equivalent to tertiary treatment. EPA has
several studies currently being conducted in this area and is cooperating
in a pilot project in Muskegon County, Michigan. Though not applicable
throughout the nation, in appropriate areas the costs would seem to be
nearly equivalent to the alternative treatment methods.
150
-------
FIGURE 1
TOTAL CONTROL COSTS AS A FUNCTION OF EFFLUENT CONTROL LEVELS
Index of
Control Costs
(in $)
TOO
50
40
30
20
Percent
Reduction
,100
99
98
95
85
Source: Interior 1965 Saline Water Conversion Study
Young and Pisano: "Nonlinear Programming Applied to Regional
Water Resource Planning".
FWPCA: Cost of Clean Water. 1968, Volume I.
FWQA: Cost of Clean Water, 1970, Volume IV.
151
-------
TABLE 1
INDEX OF POLLUTION CONTROL INVESTMENT COSTS
RELATED TO LEVEL OF ABATEMENT
Level of Removal
CJl
PO
Increased Percent
of Removal
Cost Index
Cost Per Increased
Percent of Removal
100 percent
99
98
95
85
1 percent
1
3
10
__
500
250
200
150
100
250
50
17
5
-------
TABLE 2
MUNICIPAL COSTS
(Dollars in Billions)
Level of Removal Capital Investment Operating Costs Total Annualized
Expenditures1'2 Expenditures Costs in 198P
100% 59.5 82.3 141.8 10.6
(Zero Discharge)
80% @ 95-99%
20% @ 100% 29.0 43.4 72.4 7.0
95-99% 21.3 33.6 54.9 4.2
(High Levels of Chemical
and Physical Treatment)
85-90% 10.6 16.2 26.8 2.0
(Roughly Current Program)
Assumes investment put in place by 1981.
zlncludes only treatment costs. Interceptors and other facilities related to treatment and
eligible for federal grants would raise each of the figures in this column by $12.0 billion.
^Depreciation over 25-year life, interest at 6.0 percent, and operating costs in 1981.
-------
TABLE 3
INDUSTRIAL COSTS
(Dollars in Billions)
Level of Removal
Capital Investment
Expenditures^
Operating Costs Total
Expenditures
Annualized
Costs in 19812
100% 35.0
(Zero Discharge)
80% @ 95-99%3
20% @ 100% 18.2
95-99% 14.0
(High Levels of Chemical
and Physical Treatment)
85-90% 7.0
Roughly Current Program)
139.7
174.7
10.5
66.7
49.9
27.0
84.9
63.9
34.0
5.4
4.2
2.1
Assumes investment put in place by 1981.
Depreciation for 2 years, interest at 8.0 percent, and operating costs in 1981.
Interpretation of goals in Senate Public Works Committee report.
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It should be noted that the ratio of operating costs to capital costs is
roughly four to one for industrial waste treatment while it is about one
to one-and-a-half for municipal treatment. In both cases, this illustrates
the heavy commitment to operating as well as capital costs that result from
higher levels of abatement.
Table 4 summarizes the total costs to society of achieving the various
levels of pollutant reduction.
*
Benefits Achieved at Various Levels of Abatement
The ultimate goal of any pollution control program is to achieve certain
environmental quality objectives. These goals have traditionally been
set forth in standards of quality that deal with preventing adverse
effects or achieving certain beneficial uses. For example, higher water
quality provides such beneficial uses as water supply, recreation, and
fish and wildlife. The least costly method meeting these objectives is
to tailor effluent reductions to meet those ambient objectives. To the
extent the effluent reductions are more stringent than those which are
required, excessive costs are incurred needlessly. This is particularly
true at high control levels where control costs escalate very rapidly.
In order to assess the level of improvements in ambient conditions, it is
necessary to understand the general relationship between ambient improve-
ments, their associated benefits, and the costs to achieve them. A study
of cost and benefits in the Delaware Estuary performed by the Federal
Water Pollution Control Administration illustrates the relationship of
benefits to costs.
Index of Index of
Dissolved Costs of Recreational
Oxygen (mg/1)* Control Benefits
__ _ __
5.5 320 115
5.0 150 105
4.0 TOO 100
*Approximate values, although this factor and others varied by area
within the estuary.
These data are presented to indicate the rapidly increasing marginal costs
at higher levels of abatement and the lesser increases in benefits at such
levels of control. The costs for the highest levels of dissolved oxygen
assume control between secondary and tertiary treatment. Full tertiary
treatment, i.e. a form of best available technology, would escalate the
cost greatly with very little increase in benefits. A total no-discharge
requirement would push the costs still higher.
The Delaware study is now nearly a decade old. EPA recognizes the paucity
of information concerning economic measures of benefits and is making a
155
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en
CTI
TABLE 4
TOTAL NATIONAL COSTS1
(Dollars in Billions)
Level of Removal Ten-Year Capital 20-25 Year Total Annualized Costs
Expenditures Operating Costs Expenditures in 1981
100%
80% @ 95-99%
20% @ 100%
95-99%
85-90%
(Roughly Current Program)
94.5
47.2
35.3
17.6
220.0
110.1
83.5
43.2
316.5
157.3
118.8
60.8
21.1
12.4
8.4
4.1
Excludes $12.0 billion costs for intercepting sewers.
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concerted effort to refine costs and develop methodologies for quanti-
fying benefits. Currently EPA is participating in an effort by the
Water Resource Council to develop guidelines for cost-benefit analyses.
The effect of imposing large costs to achieve small increases in water
quality benefits will have the effect of withdrawing resources from other
environmental efforts or other national priorities. For example, it will
be necessary to devote large sums of money to control air pollution, strip
mining, oil spills and to achieve other environmental goals. Also large
resources will be necessary to meet other high priority national goals.
The extent to which inordinately high amounts of money are devoted to
small improvements in water quality will cause other national priorities
to suffer.
157
J5-U.S. GOVERNMENT PRINTING OTFICEiI972 O—467-46!
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